CHRIS SMITH: Now, households could save at least between $273 and $832 a year on their power bills under a suite of changes proposed by the Morrison Government. According to a press conference that was held about 30 minutes ago, the Government will move to set a default price for electricity in line with a recommendation from the Australian Competition and Consumer Commission's inquiry into retail power prices. However, Labor says the Coalition is playing catch up on a policy the Opposition announced in August. Now, the Australian Energy Regulator will act today to require power retailers to set their prices against a default market price, and this could help households save hundreds of dollars and businesses thousands. I thought we'd go straight to the source of the story to understand it a little bit better, I've got Energy Minister Angus Taylor on the line right now. Minister, thank you very much for your time.

ANGUS TAYLOR: Thanks for having me, Chris.

CHRIS SMITH: So, explain for me what this means - a default price for electricity, how do we come up with a default price?

ANGUS TAYLOR: Well, there is three parts to what we're talking about today. That's the first part. All of this is focused on getting a fair deal for customers and stopping the rip offs that have happened in the past. Right now, customers pay a loyalty tax if they stay with their existing retailer, and that loyalty tax can be - as you said - anywhere between $200 and $800 or so, depending on where you are and who your retailer is. The loyalty tax has got to stop, and the way we're stopping it is saying to the regulator set a benchmark price. We expect customers to stay in line with or below that price and that means the customers will not pay a loyalty tax even if they don't have time to switch. Now, we do recommend customers get on the phone and try and get their bill down, if they do have the time - and a lot have. We've had 1.6 million households do this.

CHRIS SMITH: Yeah, you can achieve a lot just by picking up the telephone and saying, I want a better deal.

ANGUS TAYLOR: In fact the energy companies, since we we've been talking about this have started calling people and offering them these discounts, but there are still going to be small businesses who are just stretched every day of the week and they forget to ring before the contract rolls over. Or households who just are not tuned to sort of having to negotiate. So, they need to get a fair price. And the rip offs - the loyalty tax shouldn't happen to those customers. This measure will ensure that it doesn't.

CHRIS SMITH: Okay. So, how do you make retailers follow the changes, the up and downs of wholesale electricity prices?

ANGUS TAYLOR: Right - well, the second measure is to stop the price gouging by the energy companies, and this is a series of changes to our laws. It is a legislative package that will be brought in this year, which ensures that if the energy companies don't do the right thing, there is a big stick available to the regulator - the ACCC - and ultimately to the courts and the Treasurer if necessary.

CHRIS SMITH: So, what's the stick?

ANGUS TAYLOR: That will mean - well, it could be very significant penalties right through to divestiture of their assets. So, there's a range of sticks. We don't want to have to use these if we don't have to but we will - we will - and the Prime Minister was very clear on that. One of the things that we expect energy companies to do is to pass through wholesale price reductions. They must do that. This is crucial.

CHRIS SMITH: Okay. Going back on the default market price again, which will be set by the regulator. If a retailer doesn't follow that default market price, are there any penalties there?

ANGUS TAYLOR: Well, there will be, if we're finding that retailers are not following the default market price - and it's a reasonable price, which will be a fair price for everyone; customer and service provider - then we will act, the Treasurer and the Government will have powers to act on that and to force those prices down. Again, I don't expect that to happen, Chris. The big energy companies are on notice. They know that we expect them to treat their customers fairly, even if those customers are loyal, and of course, it's your loyal customers you should be looking after most. So, I expect they will do the right thing but, as I say, we're bringing forward legislation that will ensure that there are penalties if they don't.

CHRIS SMITH: There was a lot of discussion at that press conference and Scott Morrison was asked questions about backing investment in new reliable generation. Now, he was hounded a bit about whether that means new coal-fired power stations. I didn't see or hear any commitment from him about those.

ANGUS TAYLOR: Well, it's about reliable power, Chris. We've got a 250 per cent increase in the next three years in the solar and wind in our electricity grid. Now, that means we'll get emissions down, and households - there's a lot of households who have done well out of household solar and that's a great thing - but the challenge that gives us is keeping a reliable baseload generation in the market that we need to ensure we can keep the lights on and keep the prices down. That means the Government is prepared now to back that investment in, to make sure we've got enough of that reliable baseload power-

CHRIS SMITH: As opposed to the power that we rely on when the sun shines and the wind blows.

ANGUS TAYLOR: Exactly. Now, we've seen what happens in South Australia if you don't back this in. They have amongst the highest electricity prices in the world. They have the highest prices in Australia - $0.48 a kilowatt hour - and we are not going to let that experiment, which was done by a Labor government, we're not going to let that get rolled out across Australia, so we're going to back in investment that will ensure that we've got that reliable power to keep the lights on and keep prices down.

CHRIS SMITH: How soon can you get these suite of measures underway?

ANGUS TAYLOR: Straight away. So, the legislation will be coming forward this year. The retail price safety net, we'll be asking the big energy companies to put a down payment on that on 1 January with a full implementation on 1 July. And we're aiming to have our first pipeline, our first set of projects, we're looking at and running the ruler over by early next year.

CHRIS SMITH: Okay. I appreciate your time and your explanation this afternoon.

ANGUS TAYLOR: Good on you, Chris.