Submission to NEG draft detailed design consultation

PIAC lodged a submission to the Energy Security Board’s draft detailed design for the National Energy Guarantee (NEG). The NEG seeks to align emissions reduction and energy policy in the energy sector by introducing an emissions obligation on retailers and other liable parties as well as a reliability obligation which may be triggered if a supply shortfall is forecast.

In PIAC’s view, the design of the reliability component of the NEG should not impose unnecessary risks on market participants, particularly new entrants and smaller retailers. It must not result in higher than efficient costs for consumers without providing benefits beyond those achievable under current arrangements. A guiding principle for the design should be that the reliability obligation has a completely benign effect on the market while it is not triggered. As such, PIAC welcomes a number of the additional changes made to the design, governance and operation of the reliability obligation since the previous round of consultation including around the forecasting and circumstances under which the reliability obligation may be triggered.

Emissions reduction is essential across the Australian economy. This must be achieved in a way that is rapid, affordable, equitable and inclusive. The National Energy Market needs immediate action to lock in low emission and zero emission generation since emissions accumulate year on year in the atmosphere, and hence the benefits of avoided emissions similarly accumulate. The electricity sector is well placed to achieve significant emissions reductions in a timely and cost-effective manner.