The COAG Energy Council must address Australia’s beleaguered eastern energy markets at its meeting in Perth tomorrow with the goal of restoring conditions for a competitive marketplace over further government intervention.
The Australian Chamber’s chief economist Ross Lambie said Federal and State and Territory Governments share responsibility for the current problems the country is experiencing.
“Despite the Federal Government taking a range of actions over the last year to address affordability and reliability issues in electricity and gas markets, it is the COAG Energy Council who has the overarching responsibility and policy leadership for reforms in Australia’s energy markets – the buck stops with them,” Dr Lambie said.
Dr Lambie said Australia already has the necessary institutions (COAG Energy Council, Energy Security Board, Australian Energy Market Commission, Australian Energy Regulator, and the Australian Energy Market Operator) to ensure electricity and gas markets deliver cost effective energy to consumers.
“For these energy market institutions to perform as intended, they, along with energy producers and consumers, need clear and consistent policy direction from Energy Ministers,” he said.
“Without that direction policy uncertainty will continue to delay investment and governments will see the need to directly intervene.
“We are at a critical juncture in the history of Australia’s eastern energy markets.
“Through the COAG Energy Council effectively carrying out its responsibility and leadership role, Australia can reclaim the benefits of markets in delivering reliable and affordable energy to households and business both now and into the future, in what will be an increasingly carbon-constrained economy.
“Alternatively, we can continue down the road towards greater government intervention in our energy markets to deal with ongoing inadequate investment and the associated policy and market failures.”
Dr Lambie said that while the latter approach may ultimately deliver the reliability and environmental outcomes that Australians are seeking, it was “doubtful” it could provide the level of benefits to consumer welfare that would be achieved by restoring conditions for competitive electricity and gas markets.
“In that world, the cost of energy for households and business, and the broader economic implications are issues that persist.”