Turnbull admits 'many impacts' on energy bills in response to Labor attack
Malcolm Turnbull has acknowledged there are “many impacts” on a household energy bill after being pursued by Labor about whether he could guarantee the power price reductions floated under his proposed energy policy.
Labor has zeroed in on the price impacts associated with the national energy guarantee, unveiled by the Turnbull government on Tuesday, after the policy was ticked off on by the Coalition party room.
While the opposition is leaving itself room to move on the policy as it decides whether to support or oppose it – Labor has declared price reduction estimates provided to the Turnbull government by the Energy Security Board are little better than guesswork.
The government has argued that the new system, which imposes reliability and emissions reduction obligations on electricity retailers, could cut power bills by between $100 and $115 a year between 2020 and 2030, and reduce wholesale power prices by 20% to 25% a year.
While those estimates are in the explanatory materials about the policy, the chair of the Energy Security Board, Kerry Schott, told the ABC: “I don’t think anybody can guarantee a price reduction about anything actually because what happens with prices depends on too many things.”
Schott said the proposed guarantee was about providing a reliable power system and meeting the emissions targets set in the Paris agreement. Once the framework was in place, she said prices were “likely to come down” and would “likely” keep coming down.
Labor picked up Schott’s observations in question time, pressing Turnbull about whether or not he agreed, given the government had been signalling specific price reductions as part of its energy sell.
Turnbull said Schott was correct, there were “many impacts on a household’s electricity bill”. But he said the government was working across a range of fronts to lower power prices, and the national energy guarantee “will deliver lower wholesale prices than any alternative”.
The Labor leader, Bill Shorten, said in the absence of proper modelling about the price impacts – which has not yet been carried out by energy regulators – the government was essentially asking the opposition and the states “to sign a blank cheque”.
Labor states at this point appear deeply reluctant to sign up to the government proposal, having agreed to the chief scientist Alan Finkel’s clean energy target.
The government will need the support of the states to implement the proposal developed by the Energy Security Board. The Council of Australian Governments will meet in November.
As the dust begins to settle on the new policy announcement, analysts and energy sector participants have also pointed out that the Coalition party room, which over the past 10 years has pointblank refused to accept emissions trading and carbon pricing, has this week signed off on a de facto price on carbon.
The energy market analyst RepuTex noted while it “may be more efficient to establish a market mechanism with certificate prices for emissions reductions that could be traded transparently, the attributes of the national energy guarantee will in effect establish a de facto price on greenhouse gas emissions from the power sector”.
Matthew Warren, the chief executive of the Australian Energy Council, a peak body representing 21 electricity and downstream natural gas businesses operating in the wholesale and retail energy markets, said the government’s new policy was quite obviously a regulated carbon price.
“Well, yes, of course it is,” Warren said Wednesday. “Anything that operates, anything that drives investment in the electricity sector in the 21st century, if is going to work, has to reflect the carbon price.
“There is a value that is attributed to the risk of carbon in all investments.”
The shadow climate minister, Mark Butler, concurred, noting that the government had not designed an upfront market but there would “inevitably be a secondary market that involves pricing of the carbon arrangements that are contained in the emissions reduction arrangements.
“Now that might not be what Josh Frydenberg and Malcolm Turnbull told the Coalition party room, but … at the end of the day, companies will start contracting and trading with each other and a price will emerge on that, which reflects the carbon obligations.”
Tony Abbott, who has led the public campaign against the Finkel clean energy target, and who this week argued the government should delay the final decision on the national energy guarantee, on Wednesday struck a more conciliatory note.
He said the policy the government had produced was “vastly better” than Labor’s goal to source 50% of Australia’s energy from renewable sources by 2030, and Abbott said he was “very, very happy” Turnbull had dropped the clean energy target.
But the former prime minister noted the current proposal would drive more renewable energy into the power system and would “almost inevitably” inflate power prices because intermittent low-emissions technology would require storage and back-up.
Another government dissident, the Liberal National party backbencher George Christensen, said now that the Coalition had landed the framework it needed to invest in a new coal plant in Queensland.
Christensen said the government needed “to provide kick-starter funding for the construction of a new high-efficiency, low-emissions coalfired power plant, preferably in north Queensland”.
He said the national energy guarantee would only work “if it enables investment in coal-fired power”.