“The deals reached by ³Ô¹ÏÍøÕ¾ Cabinet today on energy price caps, and yesterday by Energy Ministers on an electricity capacity mechanism, are far from perfect but on balance they are likely to help energy users in the near term and for years to come,” Innes Willox, Chief Executive of national employer association Ai Group, said today.
“Soaring prices for coal and gas, driven by the war in Ukraine, have been threatening intense pain for businesses and households across Eastern Australia. All the response options had shortcomings, but something effective needed to be done.
“The coal and gas price caps agreed today are not a long term or preferable solution. They will be messy to implement and it would be better if we were not still so vulnerable to gyrations in these global fuel markets. But they look likely to be very helpful in dampening the immediate economic pain of this global energy crisis. Caps will need to phase out as soon as they can, depending on the evolving situation in global energy markets and Australia’s progress in speeding our supply and demand-side energy transitions.
“Yesterday’s in-principle agreement to a Capacity Investment Scheme for the ³Ô¹ÏÍøÕ¾ Electricity Market looks to be a useful part of that longer-term strategy. Phasing down coal generation will reduce our exposure to coal prices but we need to ensure that new capacity comes on line in good time – and that we can manage the variability of the renewables that will soon dominate electricity supply. The CIS agreed in principle will help ensure we get the investment required.
“There is a lot to digest from these announcements. We’ll be consulting our members on Monday and feeding into the next phase of design on the CIS. At this early stage, however, we are relieved that Australia’s governments have listened to industry, accepted the reality of this crisis, and are working together to respond effectively,” Mr Willox said.
