Scott Morrison threatens power giants with ‘big stick’
SCOTT Morrison will pressure the nation’s energy giants to slash power prices immediately or face a “big stick” including threats of forced asset sales.
NSW
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- Lower prices priority for Morrison
- NSW faces summer energy crisis
- Households still paying more for power
ENERGY giants will be pressured to slash household power bills in NSW by about $90 as the Morrison government demands “sizeable reductions” as it desperately tries to provide immediate cost of living relief before the election.
In a letter to power company heads, Energy Minister Angus Taylor said the government expects recent cuts to wholesale electricity prices to be passed on to consumers in full.
The bill relief must be in place by January 1 or retailers will be hit with a “big stick” including threats of forced asset sales.
“I write seeking your undertaking that sizeable reductions in current standing offers for your
electricity customers are in place effective 1 Jan 2019,” Mr Taylor states in the letter.
“Wholesale electricity prices are trending down. These decreases must be passed onto electricity consumers in full.
“If the industry focuses on customers and their interests, the government can return to the light touch regulation that we always prefer.”
Latest figures show wholesale power prices have dropped 21 per cent in NSW over the past year.
The wholesale cost makes up about 35 per cent of the average bill in NSW which suggests if the decrease was passed on in full it should shave about 7 per cent off the total bill households and businesses receive.
The Australian Energy Market Commission estimated the typical NSW household — with two residents — was $1289 in 2017/18.
Energy retailers would soon be called together for a round table to discuss how each intended to deliver the savings.
The government had also asked the energy regulator to come up with a benchmark power price could help NSW households save up to $400 a year but that would not take effect until July — after the next election.
Prime Minister Scott Morrison threatened the “big stick” yesterday as part of a package of new energy measures designed to put downward pressure on bills which included everything from enforceable down writing through to the courts through to divestment powers of their assets.
When asked if he was willing to make good on those threats, he said: “That’s what a big stick is for.”
Mr Morrison also announced the government would underwrite investment in new electricity generators making good on the Coalition’s pledge to act on the consumer watchdog’s recommendations on how to bring down prices.
Mr Taylor said he would ask all states to sign on to the Morrison government’s plan to force retailers to buy and invest in reliable power at a meeting on Friday.
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“There are four components to this. The first one is to empower customers with a price safety net and to end the loyalty tax put on customers all around the country simply because they’ve stayed with their electricity company, they pay more,” Mr Morrison said.
“Secondly, to give ourselves … the big stick to keep these big energy companies in line, to stop the gouging, to ensure they pass on the savings that are being achieved in wholesale prices and I don’t bluff.
“Thirdly, forcing energy companies to buy ahead, buy ahead and contract reliable energy supply into the market … so we can keep the lights on.
“And to back in investment for more new reliable power generation. That fair dinkum power generation what works when the sun doesn’t shine and the wind doesn’t blow because … there needs to be more reliable power generation going into the system to ensure that that can get prices down.”
The ACCC had recommended a price cap but the government has decided instead to set a benchmark and force retails to tell customers if they were being charged more to encourage them to shop around.
Mr Taylor said he would write to all energy companies to convene a roundtable where he would ask each to lower power prices by January 1.
“This is a down payment for all Australians on a fairer electricity market,” he said.
Mr Taylor said the government would begin consulting with industry on Tuesday about the best way to support new generators which provide dispatchable energy — including coal, gas, hyrdo and batteries — being built.
He said the government would also canvass financing options for extending the life of existing coal fired power stations which could include loans.
When asked if the government expected proposals to build coal-fired power stations, Mr Morrison said: “Whether it’s that or any other sort of energy-reliable supply to the market to get electricity prices down, that’s what we’re for.”