TOM CONNELL: The Government, of course, announced its latest plan on energy yesterday and joining me is the Energy Minister, Angus Taylor here in the studio. Thanks for your time.

ANGUS TAYLOR: Thanks for having me Tom.

TOM CONNELL: The headline figure - customers saving up to $831 a year; this was only in South Australia where the biggest saving came. Explain how this actually happens.

ANGUS TAYLOR: Well there is a difference for customers between what's called a standing offer which is what you get if your contract rolls over. It's if you're a loyal customer and you haven't rung up to call up for a better price -

TOM CONNELL: If you're a normal person that doesn't change all the time.

ANGUS TAYLOR: Exactly - and a lot of people just don't have time or the ability or don't even know to do it, they end up on what's called the standing offer versus a market offer, which is what you get if you go in and negotiate - switch between providers.

TOM CONNELL: Right.

ANGUS TAYLOR: Now what's happening is that loyalty tax has gone up over time, it has doubled in a number of markets in the last four years. So what's happening is these big energy companies are slugging their most loyal customers with a big tax - that's got to stop. The loyalty tax has got to stop.

TOM CONNELL: This particular difference, because we were talking with the industry yesterday, they were saying it would only apply to a very small number of people because you basically go - we're talking about the highest possible standing offer you're comparing it to the best and lowest market offer -

ANGUS TAYLOR: Well we're saying -

TOM CONNELL: So is it important to say - I mean - this is not an everyday South Australian, not going to save this much, this is the absolute maximum possible.

ANGUS TAYLOR: We’re saying up to, but let's not underestimate how much is at stake here. 20 per cent of small businesses are on standing offers. They can be much larger than $800, let me tell you. In South Australia, they're over $3000. So these are big numbers. They've been a real impost on customers who are simply being loyal and in particular, those really hard working small businesses and households out there, people who are commuting an hour each day to get to and from work, they just don't have time. That's just not on. We're saying to the energy companies - 1 July next year, loyalty tax has to be gone, down payment from 1 January. We want to see progression in the right direction from 1 January.

TOM CONNELL: And, we talk about this, all the different amounts people can save - business, individuals, households - we must be assuming that energy companies are going to make a lot less money.

ANGUS TAYLOR: Well energy companies have been making a lot of money in the last year or so, it's been going up over time, but the truth is that they should make money by serving their customers well. This is a sector where the customer has become a second priority for many service providers and that's got to change Tom.

TOM CONNELL: But for most people the service is - does my power work? Yes. Tick. So-

ANGUS TAYLOR: Well, there's more to it than that. I mean, how do you treat a customer when you make an offer to them? Do you make it clear what that offer is? I mean, look, right now, if you ring up and you ask for three offers, they'll give you all these percentage discounts you're getting, they're all versus different benchmarks-

TOM CONNELL: In the price-

ANGUS TAYLOR: You've got to sit there with a spreadsheet working out which one is actually a better offer for you. Well we have to make that simpler. The confusion is a tax in its own right on top of loyalty.

TOM CONNELL: I've tried to do this, I completely agree with that part of it, but is there anything wrong with saying: if all these savings are happening, these companies are going to make less money?

ANGUS TAYLOR: Well they may, they've been making a lot of money in the last few years.

TOM CONNELL: They have to make -

ANGUS TAYLOR: I can't tell you that. I think the companies that do this best, that are doing the right thing by their customers will do best.

TOM CONNELL: But the whole sector has to make less money. If we're all going to save cash on power bills - I'm not saying it's a bad thing - but is there anything wrong with just saying that's an implication?

ANGUS TAYLOR: That's an issue for them. What I'm concerned about is getting a good deal for customers. That's my focus and customers haven't been getting a good deal. You look at the penalties people have paid for late payments. I mean, often you will get flicked onto the standing offer - well that's a huge impost. That $800 in South Australia you were talking about earlier, you get flicked onto the standing offers. Now that can be a very, very big cost simply because you paid a few days late, and that's not on.

TOM CONNELL: Alright - I want to talk about another couple of things; the possible underwriting of new investments. The ACCC wanted this to, it could apply to only projects with industrial customers was the original recommendation and that it would be technology agnostic. Are these the same parameters you're looking at?

ANGUS TAYLOR: Well what it's got to be is fair dinkum reliable power, right? That's what the ACCC said.

TOM CONNELL: Fair dinkum.

ANGUS TAYLOR: It’s got to be reliable - dispatchable, to use the technical term- 

TOM CONNELL: Dispatchable - was going to say that, yes.

ANGUS TAYLOR: Dispatchable power, which means the customer gets it when they want it.

TOM CONNELL: And that's what the ACCC said, but I'm just checking that it's still technology agnostic.

ANGUS TAYLOR: Well there's a number of technologies that can deal - let's get beyond technology, a number of fuel sources that can do this.

TOM CONNELL: Right - coal, gas.

ANGUS TAYLOR: And water. Right? So they can all do it.

TOM CONNELL: Renewable with batteries.

ANGUS TAYLOR: They can all do it. It has to be firm. There's lots of ways of doing firm dispatchable power. This is about firm dispatchable power. Power that customers need.

TOM CONNELL: But you used - when you mentioned coal, gas and you said water. You didn't mention renewables?

ANGUS TAYLOR: Tom, so you want to get me into the fuel wars.

TOM CONNELL: No, no, no. I just- what I'm making sure is that we're not into the fuel wars, that the fuel doesn't matter.

ANGUS TAYLOR: The fuel wars, the fuel wars. I'm not getting into the fuel wars. What I'm into is the outcome, and I say a customer needs power when they flip the switch. Not when the wind blows or the sun shines, when they flick the switch.

TOM CONNELL: But I'm just seeing if the fuel wars are over. Does that include renewables with batteries, this underwriting -

ANGUS TAYLOR: It is any means of ensuring that when you flick the switch the power goes on. Now, that's important because in the next three years we're going to see a 250 per cent increase in solar and wind in the national electricity market, from nine per cent of generation to 23.5 per cent. That has to be firmed, it has to be made dispatchable. It has to be power that when you flick the switch, on it goes. This is a process which we're going to move through pretty quickly to get a short list of projects by early next year, that can help us to make sure we've got that dispatchable power in the system and just as importantly - perhaps more importantly - we're putting more competition into the wholesale market to drive down prices and that's what the ACCC was focussed on.

TOM CONNELL: I know there's some essentially submissions out there people can put it, we'll see what happens as well with the big stick. We didn't get to talk about that today, but next time no doubt. Angus Taylor, thanks for your time today.

ANGUS TAYLOR: Very happy to talk about that. We're not holding back on this, we need to see the right behaviour from the companies over the coming weeks.

TOM CONNELL: And maybe we can call it the big fair dinkum stick - thanks for that.