An­gus Tay­lor fails to get price cut com­mit­ment from en­ergy re­tail­ers

The Guardian Australia - - Headlines - Katharine Mur­phy Po­lit­i­cal ed­i­tor

Power re­tail­ers have ad­vanced a pro­posal to stan­dard­ise com­par­i­son rates for all cus­tomers but have given no un­der­tak­ings they will lower prices by Jan­uary, dur­ing a round­table with the en­ergy min­is­ter, An­gus Tay­lor.

Tay­lor has claimed Wed­nes­day’s Syd­ney talks as a win be­cause re­tail­ers had pro­posed vol­un­tary ac­tion dur­ing “con­struc­tive dis­cus­sions” by of­fer­ing up a stan­dard­ised rate, mak­ing it eas­ier for con­sumers to “com­pare ap­ples with ap­ples” when they shop around between re­tail­ers for the best deal.

The en­ergy min­is­ter told the re­tail­ers at the round­table he would fol­low up on the vol­un­tary of­fer, spear­headed by the En­ergy Aus­tralia chief ex­ec­u­tive, Cather­ine Tanna, with a let­ter to them next week in which he would ask them to spell out what steps they would take to lower prices by 1 Jan­uary.

Guardian Aus­tralia un­der­stands Tay­lor told the re­tail­ers their re­sponse to that cor­re­spon­dence would de­ter­mine how hard the gov­ern­ment would go in pur­su­ing price reg­u­la­tion over the com­ing months.

The en­ergy re­tail­ers were warned by their le­gal ad­vis­ers not to pro­vide any un­der­tak­ings about pric­ing be­hav­iour dur­ing the meet­ing be­cause of the risk of con­tra­ven­tions of com­pe­ti­tion law, and some say pri­vately any con­crete ac­tion on pric­ing by 1 Jan­uary is a very tall or­der given the way pric­ing cy­cles work in the en­ergy sec­tor.

Some of the re­tail­ers warned Tay­lor on Wed­nes­day to tread care­fully on reg­u­lat­ing re­tail prices given heavy­handed ac­tions or in­ter­ven­tions could dis­rupt new in­vest­ment in power gen­er­a­tion, which is one of the fac­tors re­quired to bring prices down.

Af­ter Wed­nes­day’s talks, the en­ergy min­is­ter told re­porters stan­dar­d­is­ing com­par­i­son rates would make it eas­ier for con­sumers to get the best deal, which would lead to an ef­fec­tive re­duc­tion in power prices for peo­ple pre­pared to switch, but he con­tin­ued to de­mand a “down­pay­ment” on price re­duc­tions from 1 Jan­uary.

He said the gov­ern­ment would con­tinue to pur­sue a num­ber of reg­u­la­tory ac­tions to re­duce power prices de­spite Wed­nes­day’s con­cil­ia­tory ges­ture, and he de­clared break­ing up power com­pa­nies re­mained a live op­tion if they didn’t play ball. “If we have to use the big stick, we will,” Tay­lor told re­porters.

The en­ergy min­is­ter also con­tin­ued to hold open the op­tion of the Mor­ri­son gov­ern­ment in­dem­ni­fy­ing new coal-fired power plants against the risk of a fu­ture car­bon price, which would see tax­pay­ers carry the risk of pri­vate pro­pos­als.

Tay­lor re­vealed that was an op­tion dur­ing an in­ter­view with Guardian Aus­tralia in late Oc­to­ber, say­ing the gov­ern­ment would look to ab­sorb the risks re­quired to se­cure new in­vest­ment in “re­li­able” power gen­er­a­tion.

Be­fore talks on Wed­nes­day af­ter­noon about the pro­posed gov­ern­ment un­der­writ­ing of new power gen­er­a­tion ca­pac­ity, Tay­lor said the gov­ern­ment was pre­pared to “take what steps are nec­es­sary” to en­sure suf­fi­cient quan­ti­ties of dis­patch­able power were avail­able to the grid.

The gov­ern­ment wants a rapid­fire process to re­solve the pa­ram­e­ters of the new un­der­writ­ing pro­gram, with guide­lines set­tled within weeks and ex­pres­sions of in­ter­est un­der way dur­ing De­cem­ber and Jan­uary with an eye to the tim­ing of the next fed­eral elec­tion.

The re­ac­tion from the en­ergy sec­tor has been less than en­thu­si­as­tic, although there is spec­u­la­tion in the in­dus­try that the gov­ern­ment might pur­sue pro­pos­als with ERM Power or Alinta En­ergy.

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.

Pho­to­graph: Dan Him­brechts/AAP

An­gus Tay­lor says he will con­tinue to pur­sue reg­u­la­tory ac­tion to re­duce power prices.

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