Re-regulation of electricity prices and aggressive market interventions are not the long-term answer to high energy prices, the energy industry said today.
The Australian Energy Council’s Chief Executive, Sarah McNamara, said “today’s announcement by the Federal Government has left the most critical policy, the National Energy Guarantee, in limbo.
“The NEG and policy stability remain the long-term solution to bringing down prices.
“Recent high power prices are driven by increased wholesale prices. That’s because we’ve seen more than 5000MW of power stations close since 2012 and no like-for-like replacements.
“Replacement investment demands bipartisan policy and the lack of it remains the biggest drag on the energy market. A national climate and energy policy would mean that the government doesn’t need to risk taxpayer funds to support new generators.
“Greater monitoring of power prices by the regulator is welcome. It will simply highlight that energy companies are, and have been, acting appropriately,” she said.
“But retail price caps and other interventions are trying to treat the symptoms and not the cause. This is policy with no consultation. We agree with the Australian Energy Market Commission’s assessment that re-regulation is not warranted.
“Re-regulation has the very real potential to damage competition and confidence. It is extremely difficult for any regulator to set a default price accurately. If it is set too low it will push energy companies out of the market. If it is set too high it will mean consumers are paying more than they should.”
Ms McNamara said increasing the ACCC’s powers to allow divestment of private assets was not supported by the ACCC’s own report.
About the Australian Energy Council
The Council represents 21 major electricity and downstream natural gas businesses operating in competitive wholesale and retail energy markets. These businesses collectively generate the overwhelming majority of electricity in Australia and sell gas and electricity to over 10 million homes and businesses.
The Australian Energy Council welcomes the release of the Energy Security Board's advice to Energy Ministers, and in particular its call for coordination and a common approach by jurisdictions but notes there is still much work to be done on the detail.
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