Progress Made on Energy Policy
It wasn’t mentioned by the Sunday commentators but the COAG Energy Council made considerable progress on establishing a national energy policy at its meeting on Friday.
The state and territory governments and the Commonwealth agreed to establish a default retail price for electricity.
This will set a standard regulated price, better allowing transparency on what consumers are being charged for electricity.
This could potentially save households in NSW, Queensland and South Australia up to $800 a year off their power bills, although these benefits would not apply in other states and territories, where there is already a regulated price.
The Council also agreed to the establishment of a reference price against which offers from electricity retailers could be judged and the value of any discount offered, determined.
The retailers are concerned about this decision because they believe that any collusion in the establishment of a reference price could constitute a breach of the competition laws.
Nevertheless the Energy Minister, Angus Taylor, was pleased with the outcome.
“The work that the COAG Energy Council has directed today, to focus on a reference price, will be one step further to ensure families and businesses get a good deal,” Federal Energy Minister Angus Taylor said on Friday.
There seemed to be some confusion about what the reference price’s function was. Mr Taylor said it was designed to make negotiations simpler for consumers but Victorian Energy Minister conflated the reference price with the default price.
“We’ve seen a federal government go from insisting on a default price to then insisting on a reference price, and it has now become a comparison price,” Ms D’Ambrosio said.
The Council also agreed to continue work on the reliability guarantee which will ensure that retailers by a certain amount of dispatchable power in forward contracts so that they can guarantee supply from generators at times when intermittent power fails.
However the council voted down a proposal from ACT Energy Minister, Shane Rattenbury, that the Electricity Security Board develop a regime to guarantee emission reduction by electricity generators.
Asked about the proposal, Angus Taylor said it was unnecessary.
“We are going to see a 250 per cent increase in wind and solar in the National Electricity Market in the next three years …. That is $15 billion in new renewables, wind and solar, and the result that is that we will see sharp reductions in emissions.
It should also be noted that government officials this week told Senate Estimates that there was no doubt that the influx of wind and solar had, and would continue to bring down prices from where they would otherwise be, as this exchange revealed:
“Senator Keneally: Would it be correct to say that a large reason for this fall is the expected impact of investment in renewable energy that we’ve seen under the Renewable Energy Target?
Rob Heferen (deputy secretary, energy): Yes, clearly. The extra supply coming online reduces the wholesale price. It isn’t necessarily a linear approach as we’ve seen in the past, where the new investment comes in and the wholesale price goes down, and then we saw the situation where both the Northern Power Station and Hazelwood closed, and then the wholesale price went back up again. It seems now that the wholesale price is back on its way down.”