NEG blueprint reveals greater household savings

The architect of the PM’s National Energy Guarantee has revised up the savings for households under the policy.

Prime Minister Malcolm Turnbull. Picture: AAP

The architect of Malcolm Turnbull’s National Energy Guarantee has revised up the savings for households under the policy and flagged a new $100 million penalty for power companies that breach reliability standards, in a revised policy blueprint that seeks to seal a final agreement with the states.

The final design of the NEG, prepared by the Energy Security Board, forecasts households will save $550-a-year under the policy over a decade, including $150-a-year directly attributed to the policy. Previous forecasts put the annual saving at $400, with $120 directly attributed to the NEG.

It also forecasts a collapse in renewable energy investment if the reform cannot be agreed, saying ongoing uncertainty in the sector would mean that “only those projects currently financially committed would proceed to build”.

The document seeks to break the long-running deadlock over the NEG, telling the states and territories they can support the policy without committing to the Turnbull government’s emissions reduction.

“Support by the Energy Council for the detailed design of the Guarantee mechanism, as summarised in this paper, does not constitute approval, agreement or endorsement of the elements of the emissions reduction requirement that are the responsibility of the Australian Government,” the COAG Energy Council Decision paper says.

Victoria, Queensland and the ACT have been critical of what they see as a lack of ambition under the NEG to reduce carbon emissions.

But the final design states explicitly that the government’s emissions target — a 26 per cent reduction of 2005 level emissions by 2030 — is outside the scope of the NEG.

“The electricity emissions reduction target, trajectory and its subsequent review is the responsibility of the Australian Government. The Australian Government is also responsible for whether external offsets may be used, and whether EITE load is exempt,” it says.

The document confirms a major concession for big energy users, revealed by The Australian last week, that they will not be forced to guarantee the reliability of their own power, but can opt-in to such an arrangement if they believe it is beneficial.

It resists pressure from the big generation and retail giants to eliminate new pro-market rules that would advantage smaller retailers, but offers a concession to the big players that they won’t have to report all of their trades of reliability obligation trades.

The updated blueprint confirms the NEG will not limit the ability of states or territories to set their own emissions or renewable energy targets, and that the NEG could “automatically accommodate” higher national emissions reductions targets if such targets were introduced in the future.