Energy giants, business take on Coalition

Electricity retailers and generators have united with the nation’s biggest industrial users against the new ‘big stick’ legislation.

Energy Minister Angus Taylor. Picture: AAP

Australia’s electricity retailers and generators have united with the nation’s biggest industrial users to mount an emergency ­effort to stop Scott Morrison winning powers to divest the assets of electricity companies.

Under draft legislation to be taken to the Coalition party room tomorrow and introduced to parliament on Wednesday, the Coalition could gain the right to break up corporations as part of “big stick” measures to punish electricity retailers if they fail to bring prices down.

Labor has savaged the proposal as an “extreme measure” more attuned to socialist Venezuela than Australia.

The six major business groups have urged the government to abandon the legislation, saying such a move sets a dangerous precedent, increases uncertainty and will ultimately drive up prices for consumers.

The joint statement is backed by the Business Council of Australia, the Australian Energy Council, the Australian Industry Group, the Energy Users Association of Australia, APPEA and Energy Networks Australia.

“Australia’s business community and the energy sector urge the Australian government to abandon proposed legislation that will impede the broader investment environment in Australia and specifically discourage badly needed investment in the energy sector,” the statement says, representing major electricity companies including AGL, Origin, and Energy­Australia, along with the big four banks and some of the nation’s most powerful employers such as Wesfarmers and BHP.

“The signatories to this statement are robustly opposed to the creation of unilateral divestment powers for the Treasurer. Such discretionary and quasi-judicial powers represent deep and genuine sovereign risk,” the letter states.

The bitter standoff between the Coalition and energy companies over skyrocketing electricity prices is set to escalate should the government gain such powers for the first time.

The big business groups warn the divestiture powers were not included under the 56 recommendations made by the Australian Competition & Consumer Commission and they are concerned the legislation creates an unpredictable enforcement regime.

“Driving down prices for any market requires investment. Investors require clear, stable and predictable rules so that they have the necessary confidence to make those investment decisions,” the statement says.

“This legislation will only lead to increased investment uncertainty and prices. We urge the government to abandon the bill and work with the business community on reform options which enhance Australia’s economic stability, encourage investment and deliver better outcomes for consumers.”

The renewed threat of direct government action in the energy sector underscores its fragile relationship with the big power retailers as it seeks to shake up the structure of the industry where the big three generator retailers dominate the market.

It also marks a deepening mistrust between Canberra and big business following the axing of the Turnbull administration’s ­signature energy policy — the National Energy Guarantee.

The federal government’s dumped policy attempted to fuse an emissions component with a reliability requirement while also reducing wholesale electricity ­prices.

But the proposed scheme was met with internal unrest within the Coalition, contributing to the demise of former prime minister Malcolm Turnbull and compounding a decade of paralysis on climate policy.

Energy Minister Angus Taylor has instead made reference to his clear key performance indicator as lowering prices while keeping the lights on.

That followed a warning in August the government was prepared to “wield a big stick” to reduce high power prices where Mr Taylor accused the energy ­giants of acting like the big four banks in breaching the trust of Australian consumers.

However, federal government’s hopes for a significant cut to power prices that it could take to an election have been dashed, with Australia’s major “gentailers” mostly raising or holding prices steady.

Gentailers, which own generation and electricity retailing businesses, said on Friday they had been forced to absorb rising wholesale energy prices, network charges and “green” scheme costs that subsidise the installation of rooftop solar.

EnergyAustralia, one of the nation’s big three electricity retailers, criticised the government’s big stick approach, accusing it of contradicting the advice of the competition regulator in a move that could kill investment in generation and stymie efforts to lower power prices.

The Hong Kong-owned EnergyAustralia said it was concerned by the rushed policy approach, which it argues may fail to achieve the government’s aim of tackling skyrocketing prices.

The Australian Energy Council released legal advice last month from law firm Ashurst law flagging a potential breach of the Constitution arising from several of the “enforcement powers” ­contemplated for Treasurer Josh Frydenberg.