The ACT has warned Josh Frydenberg to compromise on the national energy guarantee, with the territory cabinet vowing to only support a policy that “will genuinely help the national energy market transition to a more modern, sustainable, affordable, and reliable system”.

Following cabinet deliberations on the Neg in the three Labor jurisdictions with the power to make or break the policy – the ACT, Queensland and Victoria – key players cautioned the federal energy minister to hasten slowly.

Annastacia Palaszczuk warned the Turnbull government against asking the states to agree to a new energy policy framework “unless you first have some certainty of your own”.

She signalled Queensland would be holding fire on the scheme until after the federal Coalition party room had approved the Commonwealth elements of the Neg, which is not until next Tuesday, when parliament returns from the winter recess.

Palaszczuk declared Frydenberg was attempting to “pit state against state”. She said while Queensland wanted a national solution, it also wanted the certainty that the policy would not be gainsaid by the Coalition party room.

The Victorian energy minister, Lily D’Ambrosio, echoed Palaszczuk’s line. “We again call upon the prime minister to demonstrate he can deliver the Neg through his own party room before asking others to sign up to it.”.

Frydenberg, the federal energy minister, wants his state counterparts to provide in-principle support for the Neg mechanism at a meeting of the Coag energy council on Friday.

While the Victorian and Queensland governments are buying time, a joint statement from the ACT chief minister Andrew Barr and the climate change minister Shane Rattenbury was more explicit.

Barr and Rattenbury identified three areas of the Neg that would require improvement before the ACT would sign on.

The joint statement said the emissions reduction target – currently 26% – needed to be increased, and the final design “should not unreasonably lock in targets”. It said the review of the target, which the Commonwealth proposes to take place in 2024, “needs to be made more rigorous and occur earlier”.

The ACT said it remained at the table and would continue to pursue improvements in good faith. It noted the Commonwealth had so far failed to respond to those overtures.

Ahead of Monday’s cabinet deliberations in the states and the ACT, Frydenberg dug in his heels, rebuffing a potential compromise position put by the states to make the scheme’s emissions reduction target easier to scale up.

Frydenberg declared that the commonwealth must have sole responsibility for the national emissions reduction target in the Neg because it was the signatory to the Paris climate agreement.

The Labor states want an emissions reduction target higher than 26%, which many experts say is too low for Australia to meet its Paris pollution reduction commitments.

But Frydenberg is not in a position to push the target higher than 26% because of internal party-room intransigence. Because the federal minister has limited room to move, the states have argued it should be made easier for future governments to scale the target up. Some are suggesting that the target be set in regulation and not legislation.

But Frydenberg rejected that proposal on Monday morning. He said Labor was only pushing that outcome because it did not want to have to deal with the Greens in the Senate in the event that it won the next federal election.

He pointed out that the current federal renewable energy target was legislated, and said that was important for certainty. “You can’t just flick a switch and turn a target from 26% to 45% with all the subsequent consequences that will have for energy companies,” the minister told the ABC.

“Our position is [the target] should be in legislation, not regulation. We do need the federal government to maintain whole responsibility for this because it’s a national problem that requires a national solution.”

Frydenberg said the states had already been offered a review of the 26% in 2024, at the midpoint of the scheme, when the electricity target could be scaled up. “The states wanted a review and we are happy to provide it.”

While much of the focus has been on Friday’s meeting between Frydenberg and his state and territory counterparts, the deliberative process will run until September. Friday’s meeting is about securing in-principle support for the design of the Neg – a policy discussion, not a legislative one.

A second conversation is scheduled for next Tuesday, once Frydenberg secures the support of his colleagues for the commonwealth legislation giving effect to the Neg’s emissions reduction component.

A third conversation will happen next month about the state legislation required to implement the guarantee. That final meeting will be the definitive sign-off.

In an effort to ratchet up pressure on the states, the government has declared that a rejection of the policy will mean higher power prices for consumers.

Frydenberg told the ABC on Monday the Neg would reduce power prices by $550 a year. The advice from the Energy Security Board is the Neg will save consumers $150.

“Annual average residential retail electricity bills are projected to be around $550 lower, on average, over the 2020-21 to 2029-30 period than in 2017-18,” it said. “The modelling suggests that around $150 of that saving is additional savings due to the implementation of the guarantee.”