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Money What does the NEG mean for real cases, real people?

08:06  10 august  2018
08:06  10 august  2018 Source:   abc.net.au

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A small Brisbane café, a large sports stadium — both have to deal with massive electricity costs, both are worried, and both want to know: will the NEG help me?

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For Australians struggling with energy bills, at home and in their businesses, will today's meeting of state and federal ministers to discuss energy policy make any difference?

The Turnbull Government says it will reduce carbon emissions by 38 million tonnes, save the average Australian household $550 a year on their power bill, and reduce wholesale prices by 20 per cent.

But Canberra has been struggling to get the agreement it needs from state and territory leaders to finally put a national energy policy in place.

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Few people pause to consider what it truly means to achieve success in their own lives. Where do you need to grow? What are your weaknesses and strengths? Try bringing in a friend or colleague to act as a real and unbiased sounding board.

Ahead of the political wrangling, ABC's PM wanted to find out some of the things Australians want from a national energy policy, and whether the National Energy Guarantee (NEG) answers those demands.

Businesses call for action from government

Susanna Whitehouse co-owns two inner-city cafes in Brisbane.

Her priorities are reducing her business power bills and increasing Australia's renewable energy output.

Ms Whitehouse told PM her bills average about $43 a day, and she's definitely noticed a price rise.

"We have to think about it — do we turn on the air conditioning today?"

She feels it is the Federal Government's responsibility to reduce the electricity impost on the businesses' bottom line.

"If they don't do it, then it is not going to go down," Ms Whitehouse said.

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The Federal Government says the National Energy Guarantee will help reduce Susanna Whitehouse's costs.

How exactly would the legislation reduce costs?

Energy expert Tony Wood from the Grattan Institute is confident that the NEG will provide certainty to the market, which should help bring prices down from the recent high levels.

He said the NEG "very sensibly" does not assume any particular form of technology to achieve reductions.

"The assessment at the moment is that … consumers will be better off as a result of the guarantee."

But it does require energy retailers — the people we actually buy our power from — to ensure the electricity they supply is producing less emissions every year between now and 2030.

"That is locked into the guarantee," Mr Wood said.

"There are clear obligations on the retailers to do that."

Will the National Energy Guarantee address the demands of consumers? © Provided by ABC News Will the National Energy Guarantee address the demands of consumers? Ms Whitehouse also wants to know about renewable energy, and what it will look like in the future.

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"Will households and businesses have to fork out initially for infrastructure, or is that all part of the deal?"

Mr Wood thinks customers can have confidence that there will be a reduction in emissions; the biggest part of that coming from a shift from coal and gas to renewables.

"The cost of connecting those new renewables to the system is included," he said.

Raising prices or shutting shop – what are the options in remote areas?

For those in remote areas like Northern Queensland, the NEG may not address their concerns about pricing.

Cairns AFL doesn't fit the mould of the "average" household or business the Federal Government says will save $550 a year.

But Mr Wood believes the NEG is likely to help — eventually — by putting downward pressure on prices.

In the next few years, the state government generator, Ergon, is bringing in a new tariff system, and the AFL in Cairns and other sporting bodies are worried that will send their costs through the roof.

"The basketball people are panicking, the city council who not just run sporting stadiums like us, but swimming pools," Gary Young, the Managing Director of Cairns AFL, told PM.

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Mr Young said his organisation has been told their bills are likely to increase by 50 to 100 per cent.

"I nearly fell off the chair, because our bills range from about $7,000 to $8,000 or $9,000 a month, just to play footy during the winter," he said.

"That's when I started having a bit more of a look into these things."

Will the NEG change the high price of poles-and-wires tariff?

The only energy retailer that AFL Cairns has access to is Ergon, a government-owned corporation.

The NEG is likely have an impact on the mix of energy that Ergon is providing to customers in North Queensland, including more renewables.

"But that's not something that I think is going to affect the particular concern that Gary's got," Mr Wood said.

There are a couple of different charges Gary Young is worried about — above the line, and below the line.

Above the line includes things like putting in solar and LED lights to get consumption down.

But the below the line charge, which is for poles and wires, keeps escalating and absorbing those savings, said Mr Young.

"So, at the end of the day, we're no better off," he told Mr Wood.

This too is not something that will be addressed directly by the NEG.

As people in North Queensland find ways to reduce peak demand, that will reduce the size of the network that's needed, and that will eventually flow through to lower prices, Mr Wood said.

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"But it won't happen quickly," he warned.

"I don't think that's going to happen any time soon."

"In remote parts of Australia, the cost of the network — the physical wires and poles — is a significant burden and that's not going to be affected by the NEG in the short term," admitted Mr Wood.

"The thing that the NEG will affect is the cost of generating the electricity."

In North Queensland, most electricity is produced by the state government-owned generators, and those costs have come down a little over the last two years and will probably come down some more, says Mr Wood.

He says the NEG will provide more direction for investment for companies that generate power in Queensland (like Stanwell and CS Energy).

Forecasters 'kidding themselves'

Other energy experts PM spoke to aren't convinced the plan will work for anyone.

They're questioning all of the benefits the Federal Government says the National Energy Guarantee will deliver, saying the Energy Security Board (ESB) hasn't released enough information for the modelling to be verified.

But Mr Wood believes that once the platform is in place, future governments will be able to aspire to decreased levels of emissions.

"There are so many things that are going to move around between now and 2025 or 2030.

"Anyone who thinks they can forecast with any precision and debate the precision and the assumptions of the modelling, is kidding themselves," Mr Wood said.

But the Federal Government is standing firm on the benefits.

It says it's a national plan for a national problem, and without it, blackouts and higher prices will be a guaranteed part of Australia's energy future.

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