A National Energy Guarantee could be bad news for the ACT
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A National Energy Guarantee could be bad news for the ACT

A National Energy Guarantee could risk years of ACT energy policy and force Canberrans to pay more, ACT climate change minister Shane Rattenbury has warned.

The Greens minister met with his state and federal counterparts at the COAG Energy Council meeting in Hobart on Thursday and Friday.

Ministers Shane Rattenbury and Andrew Barr at the Mugga lane solar farm in October 2016.

Ministers Shane Rattenbury and Andrew Barr at the Mugga lane solar farm in October 2016.Credit:Rohan Thomson

Federal energy minister Josh Frydenberg had intended to ask state and territory leaders to give in-principle support to the energy guarantee, but instead sought approval to undertake further analysis of the proposal.

But Mr Rattenbury said he was concerned that the guarantee would "stymie" new sources of renewable energy, the emission targets were too low, the agreement too short and the modelling was tailored to "inflate the apparent cost-savings".

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He also said an "artificially suppressed" wholesale price would impact on the contract-for-difference model the ACT used as part of its plan to go 100 per cent renewable by 2020.

Through its reverse auctions, ActewAGL pays each large-scale renewable energy generator the difference between their feed-in tariff and the current wholesale price per megawatt hour.

However when wholesale prices are higher than the feed-in tariff, the generator pays ActewAGL and the savings are passed onto customers.

That model has insulated Canberra customers from future price rises.

But if the wholesale price was pushed down, Mr Rattebury said the ACT could pay more.

"We are concerned it will suppress artificially prices in the wholesale market and we believe the wholesale market is an effective means of driving good energy outcomes so the transition across to a certificate-based approach we think distorts the price signalling effect the labour wholesale market is designed to operate," Mr Rattenbury told a stakeholder meeting.

"As a jurisdiction it's particularly problematic for us because we have set ourselves on a pathway that's premised on having an effective wholesale price. For our consumers it's going to represent a potentially significant cost increase because of the way our electricity contracts are set for the next 20 years."

Federal government modelling predicts under the National Energy Guarantee, wholesale electricity prices could fall by up to 23 per cent between 2020 and 2030.

Mr Rattenbury told Fairfax Media "it's a risk we need to guard against".

"A well designed scheme that takes into account the ACT's innovative approach is fine but a badly designed one is problematic for us. Every jurisdiction has questions," Mr Rattenbury said.

But Grattan Institute energy fellow David Blowers said just because it looked like Canberrans could be worse off did not make it so.

"It's the optics of it. If Canberra is always paying $60 and the wholesale price is $40 it's going to look like a bad deal," he said.

"The prices people are paying, it's always a combination between the wholesale market and contract costs. Making comparisons between the wholesale markets and what people are paying is pretty difficult."

Mr Blowers said under a National Energy Guarantee, it was likely more retailers would sign onto contracts like that of the ACT government.

"Most renewable energy developments need Power Purchase Agreements to get off the ground, which are similar to what happens under the contracts-for-difference," he said.

'Because you're asking retailers to meet emission standards they're more likely to enter into these agreements to get them.

"At the moment it looks like Canberra has done a really good job because the price you pay is generally below wholesale prices. Wholesale prices may be at times in future below that but a guaranteeing for the length of a contract that people in Canberra are paying a set amount for electricity, that's not a bad thing for consumers. I am struggling to see how it will make a huge amount of difference in Canberra."

The federal government chose not to adopt the Clean Energy Target recommended by Chief Scientist Alan Finkel, instead opting for a National Energy Agreement which would require energy retailers to meet a reliability and emissions guarantee.

The reliability guarantee compels retailers to make a proportion of electricity available from "dispatchable" sources like batteries, hydro or gas, that can be switched on when demand is high.

The emissions guarantee requires retailers to cut their greenhouse emissions by 26 per cent on 2005 by 2030.

The energy guarantee won't apply to Western Australia and the Northern Territory, meaning those two jurisdictions will have no federal emissions reduction policy after the Renewable Energy Target is scrapped in 2020.

The ACT and South Australia called on the federal government to model the cost of a Clean Energy Target and a Renewable Energy Target as well but they refused.

Mr Rattenbury that was "deeply concerning".

"We know the National Energy Guarantee is the fourth or fifth best choice because that's what the backbench watered it down to.

"[The refusal to model other options] says to me it's not going to stack up."

Katie Burgess is a reporter for the Canberra Times, covering ACT politics.

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