Efficient markets and regulatory stability critical for energy investment

13 December 2012

The Energy Supply Association of Australia has welcomed the Federal Government’s focus on efficient markets and regulatory stability in its draft Energy White Paper released this morning.

esaa Interim CEO Clare Savage said the draft Energy White Paper highlights the $240 billion investment challenge facing the energy sector over the next 20 years and the substantial foreign and domestic capital that will be required to meet this challenge.

 “While there is a lot of detail in the Energy White Paper still to be worked through, it is encouraging that the Government has signalled its commitment to maintaining and improving Australia’s market and regulatory settings,” Ms Savage said.

“Investment in the sector will only be forthcoming if investors have confidence in a stable policy framework with minimum intervention in market outcomes.”

The draft Energy White Paper encourages State and Territory Governments to fully deregulate retail energy prices where effective competition exists.

Ms Savage said the existence of retail price regulation is one of the greatest threats to the energy system.

“The competitive market is the best way to ensure the lowest prices for consumers while supporting sufficient investment to maintain security and reliability,” she said.

“Trying to regulate competitive prices is a dangerous game that puts the whole energy system at risk.”

The Energy White Paper also recognises that with the introduction of a carbon price, an emissions intensity threshold is a distortion to the market that is not required.

“esaa has long argued that a carbon price is the least-cost mechanism for reducing Australia’s emissions.

“A blunt regulatory instrument such as an emissions intensity threshold could prevent the electricity industry from sourcing and delivering least-cost abatement and could unnecessarily further increase electricity prices.” Ms Savage said.

The Energy White Paper acknowledges the challenge of rising energy prices and the impact this has on all households but particularly the most vulnerable in society.

“It is imperative that all Governments work together to remove costly and inefficient market distortions to ensure that energy is delivered to customers at lowest cost.

“Enabling investment in new smarter grid technologies and promoting retail tariff reform will be the cornerstone of empowering consumers to better manage peak demand and reduce one of the most significant cost drivers within the sector,” Ms Savage said.

Ends.

Media contact:    Caroline Page     0421 103 089

The Energy Supply Association of Australia seeks to positively influence government policy decisions to ensure that Australia enjoys the benefits of a safe, secure, reliable, sustainable and competitively priced electricity and natural gas supply.

esaa’s 40-plus member businesses have more than $120 billion in assets and infrastructure investment plans worth over $49 billion over the next five years. The Association is fuel and technology neutral and member businesses have investments across a wide range of fossil fuel and renewable generation technologies.