Power companies blast Morrison's move to hand regulator power to set prices

Exclusive: Energy Council chief says last-minute changes made without consultation

Australia’s power companies have hit the roof over a last-minute inclusion in the Morrison government’s controversial energy package handing the Australian Energy Regulator power to regulate power prices, without judicial review.

The Australian Energy Council, which represents Australia’s electricity and gas companies, has advised its members that the government has, with the new legislation introduced to the House on Wednesday, bypassed the states, and handed the AER power to regulate retail prices.

In a letter to the power companies obtained by Guardian Australia, the chief executive of the Australian Energy Council, Sarah McNamara, claims that last-minute provisions were dropped into the legislation without warning.

The explanatory memorandum tabled with the bill confirms that the AER will be given the function of determining retail prices, and “it is proposed that the amounts would be determined in a non-disallowable legislative instrument that is updated annually”.

McNamara says in the letter: “This is clearly highly alarming – particularly as it has been introduced without any warning, let alone consultation, and completely ignores the current Coag and Australian Energy Market Corporation process.”

With the government already in overdrive in an attempt to avoid losing a critical parliamentary vote on the last sitting day of the year – an eventuality that would be a de facto gesture of no confidence in the Morrison government – representatives of Australia’s power companies are in Canberra attempting to persuade kingmaking crossbenchers to put the brakes on the energy legislation.

The companies have already telegraphed a potential high court challenge to the new regime. They are also lobbying the states, who are partners with the commonwealth in the national energy market, before the final meeting of the Coag energy council in late December.

The Morrison government has begun a conversation with the states about implementing a default retail price, and the companies claim the new pricing powers inserted in the legislation step around that process.

The government crept close to a positive vote on the package on Wednesday night, with key crossbenchers lining up in support, but the controversial legislation is yet to pass the lower house.

The parliamentary program was in chaos on Thursday because of tactical skirmishes in both chambers, but the energy package was expected to return for debate and, possibly, passage in the House of Representatives.

The government has been under acute political pressure about high power prices, and wants an outcome before the next election. The changes cover both energy prices and a much vaunted “big stick” divestiture power.

The divestiture power was reworked after internal objections from more than 20 backbenchers. Government MPs argued that breaking up private companies offended core Liberal values.

The redrafted proposal ensures that divestiture will only happen after a recommendation by Australia’s competition watchdog, which has first sanctioned poor corporate conduct.

The courts would also be the ultimate decision makers, rather than a government minister – the original proposal that triggered an intense backlash in the business community, and arguments that the regime may be unconstitutional.

The government says critics of the package have sided with the power companies instead of consumers.

But Labor has blasted both the package, and the process leading up to it being presented, reworked, to parliament this week.

In the chamber debate on Wednesday night, the shadow treasurer, Chris Bowen, contended that the government legislation had been pulled together in “an all-nighter in the Treasury”. He said it was possible it had drafting errors, given that the government had been forced by its own backbench to rework its original proposal, and experts hadn’t had a chance to examine it.

The shadow treasurer said there were orderly processes in place in the parliament “to stop bad law”.


Katharine Murphy Political editor

The GuardianTramp

Related Content

Article image
Bill Shorten appears on Q&A after Scott Morrison's 7.30 interview – as it happened
Labor leader takes questions from the Q&A audience after PM faced Leigh Sales. This blog has now closed

Amy Remeikis and Gabrielle Chan

06, May, 2019 @1:07 PM

Article image
Labor backs Greens plan to block Coalition from underwriting coal power
Crossbenchers are being asked to support a bill preventing the signing of contracts before the next election

Katharine Murphy Political editor

04, Dec, 2018 @8:53 AM

Article image
Labor accuses Angus Taylor of ‘desperate’ climate scare campaign over energy claims
Minister under pressure to release modelling he claims shows consumers would be $560 a year worse off under ALP’s electricity policy

Adam Morton Climate and environment editor

19, Apr, 2022 @2:27 AM

Article image
Labor grills Coalition over foreign donations and electricity prices – as it happened
A fraught and frank Coalition meeting on energy sees Tony Abbott try to dominate discussion as Chinese donations hit the headlines again. Follow the day live …

Gabrielle Chan

14, Jun, 2017 @7:12 AM

Article image
Greens to establish a 'fair dinkum' power inquiry – as it happened
Israel embassy and Indonesia free-trade deal separate discussions, PM says; Senate votes to extend My Health Record opt-out period to 31 January; and the Asean summit. All the day’s events, live

Amy Remeikis

14, Nov, 2018 @5:38 AM

Article image
Working people are over hearing neoliberalism is good for them – and Labor is lapping it up | Katharine Murphy
Bill Shorten’s new tax on trusts policy being unveiled this weekend is part of a hard-headed calculation to be more assertively progressive

Katharine Murphy Political editor

28, Jul, 2017 @3:21 AM

Article image
Superannuation backflip on $500,000 cap wins over Coalition conservatives
Treasurer drops lifetime non-concessional contribution caps, which Labor and Liberal backbenchers had rejected as retrospective

Gareth Hutchens

15, Sep, 2016 @4:15 AM

Article image
Treasurer says Australia's economy has weathered initial Brexit shock well
Report Scott Morrison commissioned on likely impacts of UK’s vote to leave European Union says Australia is well placed to deal with the financial fallout

Gareth Hutchens

21, Jul, 2016 @9:54 AM

Article image
Today's campaign: it's all about the economy, stupid
Election 2016: Labor set to release its 10-year economic policy as treasurer goes on the attack

Calla Wahlquist

07, Jun, 2016 @9:50 PM

Article image
Liberals split over Labor plan to change rules allowing MPs to 'double dip'
Malcolm Turnbull and Scott Morrison at odds over proposal to address politicians’ ability to claim both allowance and deduction

Katharine Murphy Deputy political editor

23, May, 2016 @1:48 AM