In the lead up to the Victorian State election on 26 November 2022, the current State Government has made an election promise to revive the State Electricity Commission of Victoria (SEC) as a public provider of electricity. If realised, this policy position would have far reaching implications on Victoria’s decarbonisation efforts and likely signal a broader shift in energy policy in Australia.
Originally set up in 1918 as the Electricity Commissioners, the SEC is a public body currently established under the State Electricity Commission Act 1958 (Vic) with functions and powers to, amongst other things “acquire, dispose of or trade in electricity”. In the 1970s, the SEC had a monopoly on Victorian electricity generation and distribution (by operating coal plants in the Latrobe Valley). In the 1990s, the Victorian government privatised the electricity network and deconstructed the SEC through privatisation of the different SEC functions. Through this disaggregation, Victorian power generation went from a single system operated almost exclusively by the SEC to an electricity system of private companies divided into generation (owners of coal plants and renewable infrastructure), transmission (AusNet owns nearly all high voltage transmission infrastructure in Victoria), distribution (Powercor, United Energy, Citipower, Jemena and Ausnet) and retail (the various companies Victorians directly buy power from).
The State government’s proposal is not yet a full policy, but would invest in the SEC to act as a government owned energy company selling electricity to the market. Exactly how this would happen remains to be specified in detail but would include the following key elements:
- expanding the SEC’s role as a wholesale power supplier under a 10 year plan
- funding the SEC to invest in new renewable energy projects directly or by partnering with private energy investors (such as super funds)
- exploring opportunities for the SEC to become a government owned retailer to sell electricity directly to consumers.
The proposal would revive the SEC to compete in the private energy market and deliver publicly owned replacements to aging fossil fuel electricity infrastructure. For example, the Loy Yang A power station owned by AGL Energy currently supplies approximately a third of Victoria’s electricity and is set for retirement in 2035. The State government has promised to fund $1 billion worth of renewable energy projects which would provide 4.5 gigawatts of electricity to the market with a government stake in such projects.
Electricity networks are government owned in three states and the Northern Territory, leaving Victoria’s fully private model as an exception. The proposal would not be a return to government monopoly on electricity generation as in the 1970s but an expansion of public renewable energy infrastructure via investment through the SEC. The aim would be to drive down wholesale energy prices by providing more and cheaper renewable energy to the market, as well as reducing the impact of private profits on energy bills. This would also have flow on effects on decarbonisation efforts. Currently, Victoria has a 50 per cent emissions reduction by 2030 target and a legislated net zero emissions by 2050 target. A revived SEC and associated renewable infrastructure investment would fast track these emissions targets, with the State government stating it would update targets to an 80 percent emissions reduction by 2035 and net zero by 2045.
If realised, a revived SEC in Victoria would signal a shift away from private electricity in Australia, as one of the most privatised states would see the return of a government owned energy supplier. This would be particularly significant in light of increasing Federal and State government involvement in energy infrastructure.