Power prices will fall further than recent reductions under the Turnbull government’s proposed National Energy Guarantee, Finance Minister Mathias Cormann says.
The minister has rejected former prime minister Tony Abbott’s claims that cast doubt on the estimates of a $550 a year saving on household electricity prices from the coalition’s technology-neutral policy, which will be put to a meeting of energy ministers next week.
“Prices have come down, and prices will come down by more if the governments stop picking winners by providing subsidies to one technology or another,” Senator Cormann told Sky News on Friday.
Asked about the predicted price drop this week, Mr Abbott told 2GB radio that “pigs might fly.”
“It’s completely implausible. It’s utterly incredible. Every bit of modelling has said in the past that renewables reduce prices, and the fact is the more renewables we’ve got, the higher prices go,” he said.
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But Senator Cormann said the modelling is based on economic fundamentals.
“Taking a technology neutral approach and providing certainty to investors will boost the level of investment into energy generation,” he said.
“The fundamental laws of economics remain, that if you want to bring down the price of anything, you’ve got to increase supply to meet any level of demand.”
Energy Minister Josh Frydenberg wants states and territories to back the guarantee when they meet next Friday.
Victorian energy minister Lily D’Ambrosio said her state won’t sign up if Prime Minister Malcolm Turnbull can’t get the coalition party room to support it.
Queensland and the ACT have asked for the modelling data, not just the results of the modelling, in order to satisfy themselves about the benefits of the policy.