Turnbull’s finance pledge to lock in deal on energy guarantee

The PM assures backbenchers there is “no doubt” government will commit to underwriting new dispatchable power generation.

Prime Minister Malcolm Turnbull in Sydney yesterday. Picture: AAP.

Malcolm Turnbull has assured the Coalition backbench there is “no doubt” the government will adopt a competition watchdog recommendation to underwrite new dispatchable power generation - a commitment seen as “critical” to avoiding a partyroom revolt on energy policy.

Mr Turnbull, who previously said the government would look “favourably” at the recommendation, has been under pressure to commit to the policy option as part of a “NEG-plus” proposal to secure support from wavering Coalition MPs for his national energy guarantee.

“I have no doubt that we will adopt that,” Mr Turnbull said today.

Mr Turnbull gave the commitment today as he blasted Victorian Premier Daniel Andrews’ eleventh hour demands for changes to the national energy guarantee, including a push to amend the NEG’s emissions target by regulation every three years.

“Daniel Andrews has got to decide whether he wants Victorians to pay more for electricity or less,” the Prime Minister said.

“What he’s got to do is stand up for Victoria, a big manufacturing state that needs affordable power; stand up for Victorian families and sign up to the NEG, and we know that that will deliver the certainty that enables industry to invest.”

The Australian Competition & Consumer Commission recommendation for the government to underwrite new “firm” power generation would require the Commonwealth to enter into low-cost ­energy ­offtake agreements to help new projects secure ­debt finance.

Mr Turnbull said: “It Is technology agnostic, so it would benefit anything that was dispatchable. It could be hydro, it could be gas, it could be renewables backed by hydro or gas or batteries. It could be gas alone. It could be coal.”

He said there would have to be a lot of design work done on the policy but “I am sure we will adopt it in one form or another”.

NEG critics on the Coalition backbench see the measure as a potential means of supporting new coal-fired power generation. ­

Liberal MP Craig Kelly des­cribed the measure as “critical”, while the Nationals partyroom sees the measure as non-­negotiable in ­securing its support.

However the new Victorian position represents a fresh threat to the NEG, which will be discussed at a meeting of COAG energy ministers of Friday, and the Coalition partyroom on Tuesday.

Turnbull’s finance pledge on NEG

The Victorian Labor government last night circulated a list of four demands — including a push for carbon emissions targets to be amended by regulation every three years and for emissions ­reduction targets to be “only ­allowed to increase over time and never go backwards”.

Coalition backbenchers have warned that the target must be legislated; a position backed by Energy Minister Josh Frydenberg.

Victoria and Queensland have said they will not agree to the NEG unless it is signed off by the ­Coalition backbench.

The Victorian Labor government last night circulated a list of four demands — including a push for carbon emissions targets to be amended by regulation every three years and for emissions ­reduction targets to be “only ­allowed to increase over time and never go backwards” — in a fresh threat to the Prime Minister’s ­efforts to secure support for the NEG.

Victoria, Queensland and the ACT this week increased pressure on the government to secure support for the NEG at Tuesday’s ­Coalition partyroom before they offered support for the proposed national energy framework.

EXPLAINER: What is the NEG and how it would work

The Australian understands Mr Turnbull will provide an ­unambiguous ­commitment to

The government is working ­towards an end-of-year deadline before unveiling its full response to the Australian Competition & Consumer Commission’s recent report on lowering electricity ­prices, but will fast-track the commitment to underwriting new “firm” power generation.

NEG critics on the Coalition backbench see the measure as a potential means of supporting new coal-fired power generation. ­

Liberal MP Craig Kelly des­cribed the measure as “critical”, while the Nationals partyroom sees the measure as non-­negotiable in ­securing its support.

Victorian Energy Minister Lily D’Ambrosio last night issued a new set of ­conditions for the Andrew government, including for the NEG’s emissions target to be set by regulation every three years.

The demands would make it tougher for the government to sec­ure agreement with Victoria, as Coalition backbenchers have warned that the target must be legislated. Ms D’Ambrosio said Vic­toria would not sign up to the deal unless the condition was met, along with a guarantee the emissions target could only be ­increased, not decreased.

She said Victoria also required the establishment of a transparent registry, accessible by regulators and governments, to ensure the NEG was working in the best interests of consumers.

“We can still get this right — but only if Malcolm Turnbull ­stares down the climate-crazies in his party and puts a workable scheme on the table that doesn’t hurt local jobs and households,” Ms D’Ambrosio said.

Federal Energy Minister Josh Frydenberg said on Monday that allowing the government’s 26 per cent emissions reduction target to be changed by regulation would introduce too much volatility into the scheme. “You can’t just flick a switch and turn a target from 26 per cent to (Labor’s) 45 per cent with all the subsequent consequences that that will mean for ­energy companies,” he said.

Major energy users yesterday urged the states to back the NEG at a meeting of COAG energy ministers this Friday. In a statement, 23 companies and peak ­industry groups said the country needed a mechanism to reduce power costs, maintain ­reliability and lower emissions.