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States move to cut new energy deals with Canberra

State and territory governments are lining up to cut new energy deals with federal Energy Minister Angus Taylor in a bid to make the electricity grid more reliable.

The move comes as Rio Tinto chief executive Jean-Sebastian Jacques said he had complained to the “highest levels of government” about high electricity prices hurting the company’s aluminium smelters, which could be forced into early closure.

While Mr Taylor and NSW are set to announce more state deals before Christmas, other states, especially Victoria and Queensland, are clambering to make sure they do not miss out on potential funds for much-needed energy infrastructure.

Energy players are still coming to terms with the state deals – as well as NSW’s decision to create its own Energy Security Target – and what they mean for the established energy policy-making bodies, including the COAG energy council, the Australian Energy Market Operator and the Energy Security Board.

After a surprisingly positive COAG energy council meeting in Perth last Friday, Victorian Energy Minister Lily D’Ambrosio has had initial discussions with Mr Taylor about support for the KerangLink, the high-voltage transmission line between the Snowy Mountains and Melbourne.

Queensland Energy Minister Anthony Lynham has also issued a wish list to the Morrison government, including funding for new gas transmission lines and the electrification of LNG processing plants on Curtis Island, which would free up more gas for domestic consumption.

The COAG energy council has also vowed to look into a new reliability standard by March next year, despite industry’s concerns it could drive up power prices.

Source: Financial Review