'We are not bandits', energy industry hits back
Summary: EnergyAustralia chief executive Cath Tanna is leading the energy industry's rejection of government labelling of them as "bandits" and "fat cats".....
(Pictured: EnergyAustralia chief executive Cath Tanna is leading the energy industry's rejection of government labelling of them as "bandits" and "fat cats". Christopher Pearce)
She represents a groundswell among industry leaders for a broader approach to tackling power prices and to head off the growing risk of a destabilised grid.
Ms Tanna will tell The Australian Financial Review National Energy Summit on Thursday that energy companies "aren't blameless" in playing a part in the price problem, and have let down families and businesses.
But she is set to appeal to government to drop the "big stick" rhetoric and work with, not against, the industry to help improve the outcome for customers.
That means federal and state governments getting on the same page to create a truly national energy framework and providing the right signals for industry to go ahead with investment in the on-demand power plants required to fill in the gaps between intermittent wind and solar.
"Years of policy paralysis interspersed with intense bursts of market intervention have not led to good outcomes," Ms Tanna says, pointing to hikes in power bills. "The stakes are simply too important to play politics."
Ms Tanna's words echo the frustration voiced by energy industry leaders at the summit on Wednesday at the rhetoric from the federal government, which has continued – although slightly more moderately – under new federal Energy Minister Angus Taylor.
Backing for reliability obligation
Still, chief executives including AGL Energy interim boss Brett Redman and Origin Energy's Frank Calabria voiced support for the government's fresh initiative, announced by Mr Taylor, to push forward at least with the reliability part of the National Energy Guarantee, even though the emissions reduction part has fallen away. Ms Tanna is also expected to welcome that move.
The biggest benefit of the reliability mechanism would be in starting to rebuild confidence among investors, says Brett Redman. Louie Douvis
Mr Redman said the guarantee, which would encourage investment in new plants that produce power on demand, would "definitely help" with decisions to go ahead with AGL's proposed Newcastle gas-fired generator, while Mr Calabria said it would support a go-ahead for Origin's proposed Shoalhaven pumped hydro plant.
The biggest benefit of the reliability mechanism would be in starting to rebuild confidence among investors, Mr Redman said.
"The reliability mechanism I'd actually describe as 70 per cent about confidence and 30 per cent about the mechanism itself," he said.
"I wouldn't underestimate the benefit that will have in talking to global investors particularly to allow us to move forward.
Frank Calabria says Origin Energy would support a go-ahead for the proposed Shoalhaven pumped-hydro plant. Louie Douvis
"Simply having a mechanism in place that we can then say to investors, there you go, there's something that everybody's agreed to."
EnergyAustralia's head of energy Mark Collette agreed: "The reliability guarantee is a step forward. Having bipartisan support for anything on energy policy is a step forward."
Mr Calabria appealed for a broader approach by government to tackle other areas of the power supply chain to bring down prices and reiterated that "emotive rhetoric" from the government is "not going to solve the problem".
He argued that industry has "worked really constructively over the last year on every aspect of policy" and been supportive of many recommendations put forward by regulators.
EnergyAustralia's head of energy Mark Collette: "The reliability guarantee is a step forward. Having bipartisan support for anything on energy policy is a step forward."
"They're responding to the fact that prices are high and they want solutions to that and they want them quickly," Mr Calabria said.
"We all want to do that in a way that gives a good outcome for customers" but the measures need to be enduring and go to the root cause, he added.
Mr Calabria and Mr Redman both called for the scrapping of the small-scale renewable energy scheme, saying the subsidies are no longer needed and that ending them would cut power bills.
Meanwhile, the energy suppliers got high-level support for their argument that a royal commission into energy isn't needed on top of the multitude of inquiries carried out in recent years.
Hayne a wake-up call for retailers
Energy Security Board chairman Kerry Schott said she didn't think an energy royal commission was needed but advised the industry to heed the lessons emerging from the banking one.
"Consumers need to be at the centre of what business does," Dr Schott said. "This is a wake-up call for retailers."
Mr Taylor also toned down rhetoric on a possible royal commission into energy, while keeping up pressure on retailers to reduce prices.
"I'm actually pretty optimistic," he said. "I think there is a recognition from everyone that we all have got to lift our game and deliver a better outcome from customers. I'm optimistic we can achieve that. We have to achieve it."
Ms Tanna will also appeal for state governments to scrap their bans on onshore gas development and to "trust the experts to do their jobs".