Leadership spills and power struggles: Turnbull abandons NEG
As the Liberal party fights over the top spot in a stoush that led to a leadership spill earlier today, Prime Minister Malcolm Turnbull has put the NEG on the backburner and is now suggesting alternative ways to drive down energy prices for Aussie families.
The NEG was the government’s plan for the future of the Australian energy market. The framework was supported by a recent ACCC report, which made recommendations to the electricity sector, detailing how to reduce energy prices, and also included an emissions reduction target.
But the policy has been very controversial, and without the support of rebels such as former Prime Minister Tony Abbott, moving forward with the emissions component of the NEG was unlikely to pass the house of representatives, meaning it would never be legislated.
This lead Turnbull to more or less scrap the plan.
“While the policy, the legislation, has the clear support of the Coalition party room… the absence of bipartisan support means that as long as that remains the case we won’t be in a position to take that legislation forward,” he said.
“In politics you have to focus on what you can deliver and that’s what we’ve done and will continue to do.”
Price cap to take place of NEG
The government’s current plan is to act on the ACCC recommendation to set a ‘default market offer’ that will require retailers to replace their current retail standing offers with a price determined by the Australian Energy Regulator (AER).
This should help Aussies save by outlining the maximum amount those in the National Energy Market should be paying for electricity.
The ACCC report also requires retailers to reference discounts in the new ‘default’ offer, so consumers don’t get blinded by headline rates, making it easier for them to compare energy rates on equal footing.
A $31.9 million boost in funding has been dished out to the ACCC and the AER to improve monitoring of the energy market and fine any retailers that exceed this cap.
Will the price cap drive down energy bills?
Despite plans to abandon the NEG, driving down household energy costs remains the priority for those in power.
The ACCC report suggests that with the new plan based on it’s recommendations, Aussies on standing energy offers could save between $183- $416 a year on their energy bill.
Mozo Data Manager Peter Marshall agrees that we need some form of regulation before we’re likely to see prices fall.
“It remains to be seen if the new arrangement will drive down energy prices by increasing competition,” he said.
“Energy pricing can be very complicated so anything that makes it simpler for Australians to understand is worth doing."
What about the emissions reduction targets?
With the government putting a heavy focus on pricing, national emissions reduction targets have taken a back seat.
However, Turnbull and Environment and Energy Minister Josh Frydenberg have encouraged states to legislate the part of the NEG that regulates where retailers source their power from, to encourage investment in renewable energy.
If you’re conscious of your environmental footprint and are interested in switching a green plan, head over to our energy cost cruncher, and select ‘important’ next to ‘Green Energy Plans’.
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