The decision by the COAG Energy Council to undergo further design work on the National Energy Guarantee (NEG) has received widespread support from industry and consumer groups.
As part of the agreement, the Electricity Supply Board (ESB) will further develop the design details of the NEG and report back to the COAG Energy Council by April 2018.
The NEG is expected to drive the right investment and reduce emissions without subsidies, taxes or trading schemes.
It is also anticipated large energy users will greatly benefit from the NEG.
For example, a chemical factory could see a reduction in its energy bills of around $1.4 million per year and a paper manufacturer around $10 million per year.
Prime Minister, Malcolm Turnbull, said the Australian Government looks forward to continuing to work with the states and territories, and the ESB on the NEG in the lead up to the next COAG Energy Council meeting in 2018.
The peak body representing large energy users, the Energy Users Association of Australia (EUAA), said it welcomed the intent of COAG Energy Ministers to keep working on the NEG.
Without a national energy policy in place there has been no signal for investors which has contributed to a reduction in new investment and competition, both of which are critical factors in increasing wholesale energy prices.
EUAA Chief Executive Officer, Andrew Richards, said, “We have been going backwards on energy policy for the last decade and that has been a disaster for energy users who are losing faith that politicians, regulators and the energy industry can resolve the many issues we face.
“With energy ministers engaging in good faith discussions and with an intent to keep this important process moving forward, even if they are baby steps, it can only be seen as a positive.
“The EUAA is keeping an open mind on the NEG and looks forward to engaging with the Energy Security Board and energy ministers to ensure we get the architecture right so that it delivers for energy users.”
Energy Consumers Australia, CEO, Rosemary Sinclair, also welcomed the outcome from productive discussions by the COAG Energy Council on energy affordability and the NEG.
“Consumers have been telling us they want to see governments and industry focused on making their power more affordable and still reliable while lowering emissions,” Ms Sinclair said.
“The outcome from today’s COAG Energy Council meeting helps achieve that by moving forward in a productive way on the NEG.”
Ms Sinclair said ongoing cooperation was needed between governments and from across the energy sector to develop a framework that provides more affordable and reliable power for consumers, while lowering emissions at least cost.
“From here we need a strong, open and collaborative effort to build a framework that can deliver investment certainty, bring down prices and help rebuild the community’s trust and confidence in the sector.
“I am heartened that we now have a process and that all jurisdictions will be involved in the detailed design work that will now be progressed.
“We look forward to working with the ESB, governments, energy businesses and consumer groups on the detailed design of the National Energy Guarantee, to deliver the right outcomes for consumers.”
The clean energy industry also welcomed progress on further policy development for Guarantee, but said the process would now need to address the many concerns it has about the policy.
Clean Energy Council Chief Executive, Kane Thornton, said the most important issue is whether the NEG can ultimately deliver new renewable energy investment that is crucial to reduce power prices.
“The clean energy industry will only support the NEG policy if it is designed and implemented in a way that ensures strong and sustained investment in renewable energy and energy storage,” Mr Thornton said.
“A lot of analysis and work is now required to fill in the detail necessary to fully assess the policy and its potential. This will determine whether it is capable of delivering this new investment and able to secure support from the clean energy sector.
“We look forward to working closely with the Energy Security Board and the COAG Energy Council.”