The National Energy Guarantee lives to fight another day

Ted Surette, National Industry Leader, Energy & Natural Resources
Ted Surette, National Industry Leader, Energy & Natural Resources
Eamonn Corrigan, Director, Infrastructure & Projects Group
Eamonn Corrigan, Director, Infrastructure & Projects Group

A fundamental shift is needed in energy policy to provide a sure path for Australia to meet its emission reduction obligations while ensuring a reliable and affordable supply for customers. We therefore welcome today’s announcement by the COAG Energy Council of further work to develop the National Energy Guarantee (NEG).

It has been reported that average household electricity bills would be $120 a year lower under the NEG compared to a scenario where no policy was implemented. The modelling also estimated that a medium-size business such as a supermarket would save $400,000 a year, while a large energy user such as a chemical factory would save up to $1.4 million.

KPMG’s economy-wide analysis using the KPMG-CGE model shows the importance of achieving electricity price reductions for economic growth. Our report, released on 3 November 2017, estimated that a 10 percent increase in the cost of generating electricity would result in a cost to the economy of around $4.2 billion and nearly 26,000 lost jobs.

During the next phase of the NEG’s development a priority for the Energy Security Board will be to examine whether the policy could result in unintended issues. Electricity supply is a complex system and changes to the “rules of the game” in one part of the supply chain can have adverse effects on another. One such issue is whether an inability for non-vertically integrated retailers to secure competitively priced contracts and manage compliance costs will reduce competition and choice.

With public consultation on the NEG occurring prior to the next Energy Council meeting in April 2018, it will be important for energy industry stakeholders to have well defined positions so they can actively engage and influence the design process.

The Energy Council communique can be accessed here: http://www.coagenergycouncil.gov.au/

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