Energy giant AGL says the Morrison Government’s proposed big stick energy regulations will damage Australia’s energy market.
In a submission to government, AGL says the ‘Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018’, currently before the House of Representatives, will make the electricity grid less reliable. It referred to the proposed penalties as “extreme and arbitrary”.
The Sydney Morning Herald also reports AGL’s claim that the bill will delay investment in new generation and likely push up prices and degrade energy security.
Treasurer Josh Frydenberg and Energy Minister Angus Taylor announced the new legislation in December 2018. A joint statement said the government will respond to problems the ACCC identified with “penalties and remedies”.
Energy companies could face divestment orders
The types of misconduct the legislation would cover include:
- Failure to pass on cost savings to consumers.
- Withholding hedge contracts for the purpose of reducing market competition.
- Manipulating of the energy market by withholding wholesale supply.
Penalties may include fines of $10 million or more. Energy generation companies that engage in fraudulent or dishonest activity to distort prices may also be forced to be broken up under divestiture order laws.
The bill now states these orders can only be made through the Federal Court. Previously, the government called for the Treasurer to have the final say on divestiture.
The government says its purpose in the draft laws is to deliver a “more affordable and reliable energy supply and a stronger economy”.
AGL slams big stick energy regulations as ‘draconian’
AGL describes the big stick energy regulations approach as “draconian” and of the type usually reserved for matters of national security.
The energy giant is no stranger to government pressure. Last year, the company faced off pressure from the Federal Government to keep its Liddell coal-fired power plant open past its scheduled closure in 2022. The company asserted that the long-term future of the industry is in renewables, examples being commercial wind farms and large-scale solar installations.
AGL chief Brett Redman said keeping the plant running until 2022 would require a huge investment. It would also involve risks around safety and carbon emissions, he said.
