Australian energy

The Costs of Rejecting the National Energy Guarantee

If you run a business the two things you need to keep the closest eye on are costs and revenues. The difference between the two is your profit…or loss.

When you can’t accurately estimate what your costs will be in the year ahead, it can hamstring any decisions on new investments. This is precisely the dilemma facing Australia’s energy companies.

Energy retailer and wholesaler AGL has warned power prices will rise and the hip-pockets of Australian families will be hit if the National Energy Guarantee is rejected.

State and territory energy ministers will meet in Sydney today to examine the detail of the NEG, which the government says will eventually reduce household power bills by about $550 a year.

In a profit report to shareholders on Thursday, AGL said it would move forward with its plan to close the coal-powered Liddell Power Station in NSW.

And AGL chief executive Andy Vesey says his industry needs policy certainty so it can invest in clean energy replacement projects, which he says will produce cheaper power.

If we had the NEG then we would look into further additions to our NSW generation replacement plan because it would let us know what the rules are and how we can go forward with that,’ he said.

A commitment from the government would help AGL go ahead with a plan to build a 500 megawatt gas plant in the south west of NSW as well as potential investment in pumped hydro projects, Mr Vesey said.

If you get the NEG, then you get much more sense about the future investment and what the stabilising and moderating of prices should be for the long term,’ he said.

Without the NEG, you’ll probably see a continuation of the stagnation in terms of investment and the fact that prices will remain high.’

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The Australian Tribune with AAP

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