Michael Fraser, AGL chief executive, who yesterday announced the company had cut marketing and investment in those states, said the price moves brought into question the renewable energy target. The target mandates that 20 per cent of Australia's electricity should come from renewable sources by 2020.
"We have consistently said the target should stay where it is, but as a result of what we have seen come out of South Australia and Queensland, it does call into question how the target is going to be met," he said.
"Retailers are the ones who have to invest or write contracts to underpin the investment and if regulators are then going to interfere in the market and regulate down prices, it raises the whole question of how you recover that very substantial upfront capital cost. This regulation calls into question how the target will be met."
Mr Fraser warned that state governments should get out of regulating prices.
"We have a national electricity market, a national carbon scheme, a national renewable target, national rules around transmission and distribution, yet we still have state governments holding on to price controls in their local markets. It makes no sense whatsoever," he said.
The company told shareholders at its annual meeting in Sydney yesterday that its profit could be hit by up to $60 million because of the recent adverse Queensland Competition Authority pricing decision and a similar draft decision by the Essential Services Commission of South Australia.
AGL said yesterday it would suspend any investment in power generation, including renewable energy, in South Australia.
