Energy giants and industry investors are warning the federal government’s proposed laws to lower power prices will instead lead to increased bills for Australians.
The draft laws include penalties and the potential forced break-up of companies, which the government argues are needed to ensure power retailers and generators do not make decisions which deliberately jack up the price of electricity.
“The bill is unworkable, confusing, discourages investment, is an overreach into a free market, and a potentially costly burden on taxpayers,” Origin Energy wrote to the Senate committee scrutinising the draft laws.
While two of the 24 submissions support the proposals, the remainder are critical of the government’s plan.
AGL says the bill doesn’t address the causes of increased energy prices, which the company says is due to the withdrawal of ageing generators from the National Energy Market, coupled with a tightening in supply and demand.
“The bill is likely to delay investment and put upward pressure on prices,” AGL’s submission says.
The Business Council of Australia is urging the government to withdraw the bill.
The proposed legislation creates three kinds of prohibited conduct for energy giants, based on retail pricing, the electricity contract market and wholesale market.
If found to be withholding savings to customers or preventing competition in the market, the draft laws give the ACCC the power to fine a company, apply for an injunction to stop the behaviour or alert the treasurer.
The treasurer could then apply to the Federal Court to see that energy company sell off or separate its assets.
Many submissions outline concern with the definition of “prohibited conduct” and the impact government intervention will have on investment.
The economics legislation committee is due to report on the proposals by March 18.
Public hearings will also be held next week in Sydney and Melbourne.
Both the Queensland and WA energy ministers say they were not consulted in developing the legislation, despite their states being directly impacted by it.
Queensland’s energy minister Anthony Lynham, says he asked twice to see a copy of the draft laws before they were introduced to federal parliament, but did not get a response.
But Treasurer Josh Frydenberg says the draft laws are part of the government’s plan to protect customers from high power prices and uncompetitive practices in the energy market.
Court ordered divestment would be used as a last resort, he added.
Labor’s acting energy spokeswoman Penny Wong says the government’s modelling warned of power bills increasing by $300 if the National Energy Guarantee was abandoned.
“Australia deserves clear, consistent and credible energy policy, to modernise the system, invest in new generation and bring carbon pollution and prices down,” she said in a statement.