Ai Group submission on Senate Energy Market inquiry

As with the earlier and similar version of the Bill, Ai Group’s submission expresses a strong preference for market mechanisms and predictable energy policy to encourage efficient investment in the energy sector and help to lower electricity prices. While we have acknowledged the need for some additional provisions for the Climate Change Authority to target specific conduct in the sector, disproportionate intervention in the electricity market would have an adverse impact on sustainable and effective investment in the electricity sector, thereby harming the long-term interests of energy consumers.

Ai Group Chief Executive, Innes Willox, said: “Ai Group strongly believes that given the existing level of uncertainty in the energy sector, further measures such as those outlined in the Bill to force business entities to restructure or divest some or all of their assets, risks having a materially detrimental impact on their existing commercial operations and investment strategies.

“These risks apply to all private participants in the generation sector, not just large incumbents. More generally, creating a power to break up energy businesses would set a poor precedent for disproportionate government intervention in the wider economy. It would raise deep reservations among domestic and international institutional investors regarding investment in Australia, including in the infrastructure sector.

“Despite the considerable progress underway on energy market and policy reforms in recent years, the ongoing uncertainty over national energy and climate policy has greatly exacerbated the underlying uncertainty of investment in a market undergoing fundamental changes to technology and business models. Investment to remedy these problems will be lower and slower than it should be if this Bill is passed,” Mr Willox said.

Ai Group’s full submission including recommendations for amendments can be found here.