Extract from The Guardian
Energy minister to meet with CEOs as Scott Morrison heads to marginal seat of Capricornia
The energy minister, Angus Taylor, will host the first of two
stakeholder briefings about the Morrison government’s controversial
plans to underwrite new investments in power generation, and also attempt to cajole retailers into delivering out-of-cycle power price reductions before the next federal election.
As Taylor attempts to secure a breakthrough on power prices in Sydney on Wednesday, Scott Morrison will press ahead with his pre-election campaign sortie in Queensland – spruiking funding for a ring road in Rockhampton in the marginal seat of Capricornia, held by the Nationals MP Michelle Landry.
Energy retailers were mostly tight-lipped ahead of Wednesday’s power price discussions in Sydney but the chief executives of Ausgrid, Endeavour Energy and TransGrid pushed back ahead of the roundtable, declaring network costs had already come down by between 15% and 17%.
In a statement, the companies said the network contribution to
residential electricity bills had already come down both in terms of
cost on the bill ($702 to $619) and the share of bill (52% to 43%).As Taylor attempts to secure a breakthrough on power prices in Sydney on Wednesday, Scott Morrison will press ahead with his pre-election campaign sortie in Queensland – spruiking funding for a ring road in Rockhampton in the marginal seat of Capricornia, held by the Nationals MP Michelle Landry.
Energy retailers were mostly tight-lipped ahead of Wednesday’s power price discussions in Sydney but the chief executives of Ausgrid, Endeavour Energy and TransGrid pushed back ahead of the roundtable, declaring network costs had already come down by between 15% and 17%.
The executives warned Taylor that the key to unlocking “the next wave of price relief” would be unlocking new investment in the power grid and “addressing supply constraints in the wholesale market and ensuring there is more effective competition and innovation, which will deliver benefits to consumers”.
Energy companies are deeply irritated by the Morrison government’s decision to abandon the emissions reduction component of the national energy guarantee, with the policy a casualty of the government’s internal divisions.
Stakeholders argue the sector now lacks the requisite policy certainty to underpin new investment in assets with operating lives of several decades.
Some of the companies also wonder about the purpose of Wednesday’s discussions given any collective discussion about action on pricing could be considered a breach of competition laws.
Taylor will host two sessions on Wednesday. The first is focused on lowering power prices for consumers and business, and the second involves outlining a new program the government wants to put together quickly involving the underwriting of new investment in generation.
On pricing, the government is intent on pursuing regulatory changes such as introducing a default market offer for energy prices for households and small businesses by next July. With election timing front-of-mind, the government has demanded the companies lower the cost of their standard offers by 1 January in preparation for the new regime.
The government has been threatening the retailers with a so-called “big stick” – new divestiture powers to break up energy companies engaged in price gouging – in the event concessions are not forthcoming. That threat has alarmed business and the proposed divestiture regime is unlikely to be backed by Labor.
To encourage new investments in generation, Taylor has signalled the government could provide an indemnity for private projects as part of “absorbing” the risks currently stopping companies investing in new “reliable” power projects.
One of the key problems preventing private investment in new coal-fired power generation is proponents have struggled to get finance because they are unable to predict future carbon risk, particularly given Australia’s decade-long partisan standoff over emissions reduction policies.
Taylor told Guardian Australia in a recent interview the government would look to remove the risks currently stopping investment in new power generation.
“I’m saying we will look at whatever risks that can’t be managed by the companies that need to be managed to get investment,” he said. “What we are saying is the risks that government needs to absorb to get investment in reliable generation, we will look at absorbing. We need the investment.”
Labor has issued a clear warning to Australia’s energy sector that it does not support the government indemnifying new coal plants against the future risk of a carbon price – noting the cost to taxpayers could run into billions.
The government has invited banks, retailers, generators, new project proponents, investors, industry groups and other interested parties to Wednesday’s briefing. Twenty-three organisations have indicated they will attend.
The government wants a rapid-fire process to resolve the parameters of the new program, with guidelines settled within weeks and expressions of interest underway over December and January with the eye to the timing of the next election.
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