At the very least it removes much of the public relations wind that was being created by the government’s continuous reference to ‘big stick’. But it was always dangerous to place such powers in the hands of a government - particularly a government that has been completely hapless and inept at its attempts to formulate a comprehensive policy that provides the energy market investors with any certainty on climate or emissions. Angus Taylor threatens energy retailers with small twig. The narrow focused on influencing retail prices and using whatever means to do it was a naked attempt to muster support from consumers in the lead up to an election. (Of course there is nothing wrong with attempting to ensure energy companies are competitive and don’t overcharge. But this is best left with the competition and consumer regulator.)

The whole idea of having the nuclear option to force energy companies to heel clearly had value for the Coalition which figured that appeal to voters. But it was threat to investors in energy companies and the positive reaction to the change in the proposed energy policy was evident enough on Tuesday when AGL’s share price rose against the tide of a falling stock market. Loading Replay Replay video Play video Play video The big stick policy however contained a series of issues around overreach - not the least of which was the government’s ability to mandate asset divestments, even with the recommendation of the consumer regulator, the Australian Competition and Consumer Commission. The business community had already started to harness its lobbying powers to go into battle. It was appalled at the prospect of legislating such powers and made much of the sovereign risk associated with what might become the thin end of the wedge.

Loading The groundswell for a High Court challenge from energy companies, on constitutional grounds, was already in train. Even the government’s own backbench contained members that harboured concerns about forcing divestiture saying they were inconsistent with core Liberal values. Additionally there was a lack of secure support from the cross bench. The circumstances under which these divestiture powers could be invoked was also unclear - other than price gouging. Indeed going to war with energy companies has allowed the government to gain little ground.

The minister in charge of this energy nightmare, Angus Taylor met with various stakeholders in the energy market a few weeks back -a well heralded get together that was billed as exercise in achieving some consensus on consumer price caps. The minister emerged from the forum claiming victory in getting the energy retailers to agree to provide customers with standardised and easily comparable rates by July 1 to enable them to make easy comparisons, and make a January 1 ‘voluntary downpayment’ on this exercise. What is left following this week’s policy dilution is a rescheduling of this legislation until next year. Price caps didn’t appear to feature at all in the discussions. Rather than taking the form of a high-level meeting between Taylor and the chief executives of the big energy companies, the gathering at the Intercontinental Hotel seemed more like a town hall meeting with 20 companies represented.