Households are expected to save up to $150 every year on their power bills under the National Energy Guarantee (NEG), according to a new policy blueprint.
The final report detailing the design of the NEG, prepared by the Energy Security Board, said the energy policy would cut electricity prices in most states and territories over the next decade, The Australian reported.
The report projected households would save around $550 a year on their power bills in the next decade, with a saving of $150 a year directly attributed to the NEG. Previous forecasts put total savings at $400 every year, with $120 directly as a result of the policy.
It said that power prices were expected to fall, even without the policy, due to more renewable generation entering the system in the next three years, reported the ABC.
The NEG is the Turnbull government’s flagship energy policy aimed at guaranteeing reliable electricity and emissions reduction. It seeks to do this by requiring power companies to invest in sources such as pumped hydro, battery, gas, and coal to cover potential shortfalls in electricity on demand. The plan also requires them to meet a emissions reduction target consistent with Australia’s obligations under the Paris climate agreement.
The policy proposes a 26 percent carbon dioxide reduction for the electricity sector as part of Australia’s overall commitment to a 26-28 percent reduction on 2005 level emissions by 2030. It also programs a review to be conducted in 2024 of the emissions reduction trajectory from 2025-2030, The Australian reported.
While the review could recommend a higher target, any alterations to the 26 percent level would have to be made through legislation, reported the paper.
The emission reduction target has been a sticking point for Labor governments in Victoria, Queensland and the Australian Capital Territory, who see it as not ambitious enough.
Even if the states agree to a framework, federal Labor has indicated it would block the federal legislation on the NEG if it did not contain measures to allow an increase in the emissions reduction target, the ABC said.
The report also predicted a collapse in renewable energy investment if the policy is not passed due to uncertainty in the market.
NSW Labor Senator Jenny McAllister told Sky News the government’s target was inadequate.
“We think the targets are inadequate we actually think they will do harm to other parts of the economy,” she said.
“If you go light on the electricity sector it just means that the transport sector the agricultural sector has to do more of the heavy lifting we don’t think that is good for the economy.”
Liberal backbencher Tony Pasin said it would be “foolhardy” for Labor to lift the target if they win the next election.
“[If Labor wins the next election] it’s very likely they’ll use this infrastructure—sadly, I say—to ratchet up the target for emissions reduction and thereby lead to higher energy costs,” he told Sky News.
State energy ministers will meet on Aug. 10 to decide whether to approve the NEG and have it legislated by the states.