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Underwriting coal power exposes taxpayers to billions, industry group says
(The Guardian, 15 Nov 2018) Ai Group expresses significant concern with the Morrison government’s controversial plan to underwrite new power generation.
A leading business group has expressed significant concern with the Morrison government’s controversial plan to underwrite new power generation, noting it could leave taxpayers exposed to liabilities “with a net present value of billions of dollars”.
The Ai Group has used its submission to flag major problems with the proposal, ranging from its “extremely aggressive” administrative timetable, with projects being drummed up before the next federal election; a lack of obvious “strong independent governance” arrangements, and the lack of an overarching climate and energy policy.
The criticism joins significant pushback from Australia’s power companies, and from lobby groups representing renewable energy, reflecting profound frustration in the business community about the way the Coalition has conducted itself on climate and energy policy.
Only the lobby group representing Australia’s resources giants, the Minerals Council of Australia has, thus far, lent public support to the initiative.
The Ai Group says an underwriting program to encourage new generation is reasonable in theory, but if it is not well designed then taxpayers are exposed to significant risks, generators can be shielded from market pressures, and special treatment for some generators can deter investment outside the program.
It notes the Australian Competition and Consumer Commission proposed an underwriting program with a low price floor of $45-50 per megawatt hour “that would be unlikely to expose the Commonwealth to much financial risk” – but the Morrison government has ignored those parameters and is pursuing options that “carry much greater risks”.
The Guardian, 15 Nov 2018: Underwriting coal power exposes taxpayers to billions, industry group says
