The ACCC’s Retail Electricity Pricing Inquiry final report has backed the Federal Government’s proposed National Energy Guarantee (NEG).
The inquiry, which commenced in March 2017, has identified the root causes of high electricity prices across the entire electricity supply chain, and has made 56 recommendations detailing ways to fix the NEM.
In the final report, the ACCC says it supports the development of the NEG.
“The NEG seeks to more clearly link the introduction of lower emissions generation sources to the ability to call on generators to produce energy when it is most needed,” the report says.
“To the extent that this policy can encourage investment in capacity from a diverse range of sources, diluting market concentration and promoting competition to supply retailers, the policy should assist in delivering electricity affordability.
“The ACCC supports the development and implementation of the NEG, incorporating appropriate safeguards for competition in the contract market, as a way to achieve a settled policy framework under which new investment is encouraged in a way that reduces carbon emissions at low-cost while promoting investment in a manner that ensures demand for energy is met.”
Federal Energy Minister Josh Frydenberg said the government would consider all recommendations.
“The government welcomes the ACCC’s endorsement of implementing the NEG and the abolition of the Limited Merits Review regime.
“These actions will lower household and business energy prices and provide certainty of supply.
“The energy market is complex and the recommendations require and deserve thorough consideration.
“We will consider the recommendations in detail and consult with stakeholders and jurisdictions as part of developing the Commonwealth’s response before the end of 2018.”
Mr Frydenberg said the Federal Government would also work closely with the states and territories on cross-jurisdictional recommendations, especially those relating to the design and operation of the National Energy Market (NEM).
The Australian Energy Council chief executive Sarah McNamara said the NEG could deliver this critical investment in the energy sector.
“The energy industry has been dealing with more than a decade of energy policy uncertainty that has had an adverse effect on much needed investment in the wholesale market,” she said.
“We encourage the government to consult on the detail of the ACCC recommendations to avoid any unintended consequences, especially on those recommendations that involve market interventions.
“Such proposals must not unintentionally undermine the commercial functioning of the wholesale market, which can put taxpayer funds at risk and deter future private investment.
“The ACCC report indicates there are no simple solutions but that more steps can be taken to improve confidence in the energy market.”