The Turnbull government has avoided an all-out brawl with the states and territories over its signature power policy, securing agreement from most energy ministers to progress the proposed national energy guarantee.
But Victoria has warned that states remain "extremely nervous" about the government's plan, and South Australia accused its coal-dependent counterparts of banding together and supporting a "third-best option" for the future of Australia's electricity sector.
The national energy guarantee forces energy companies to meet mandated standards of reliability and emissions reduction. The Turnbull government says it will deliver lower power prices and a more reliable electricity supply, but critics say it thwarts growth in renewable energy, props up ageing coal-fired power plants and will fail to sufficiently drive down dangerous carbon emissions.
Environment and Energy Minister Josh Frydenberg on Friday headed off a defeat at the meeting of COAG energy ministers in Hobart by seeking their support only for conducting more extensive work on the design of the guarantee, rather than seeking backing for the plan itself.
The federal government needs the support of the six states and territories plugged into the national electricity market to implement the guarantee. NSW, Victoria and Tasmania - along with the Commonwealth - voted in favour of the Energy Security Board conducting more work on the design of the plan, including consultation. South Australia and the ACT opposed the move. Queensland is in caretaker mode and did not vote.
The energy ministers will consider the national energy guarantee in April once further work is completed.
Victorian Energy Minister Lily D'Ambrosio said later that despite voting for more work to be conducted, "no-one has signed up to the NEG - and no one is necessarily going to sign up next year."
"Everybody was extremely nervous about what the NEG could actually mean," Ms D'Ambrosio said, adding "we're not going to sign up to anything that compromises or undermines our nation-leading reforms".
South Australia moved amendments for work to be conducted on a clean energy target and emissions intensity scheme, to prove whether the national energy guarantee was indeed the best policy. However only the ACT supported the move.
Prime Minister Malcolm Turnbull said South Australia "tried to stand in the way" of the guarantee but was outvoted.
"I want to congratulate Josh [Frydenberg] and congratulate the energy ministers. They've resisted the temptation to play politics with this ... This is a plan that is built on engineering and economics," he said.
South Australian Energy Minister Tom Koutsantonis said the meeting was disappointing and "the coal-dependent states are sticking together".
"Coal is not the future of this country ... It seems that this Commonwealth government is addicted to clinging to the past," he said.
Mr Koutsantonis said South Australia and the ACT will conduct their own modelling on an emissions trading scheme and clean energy target, and compare it to the Turnbull government's guarantee.
"Quite frankly, what I think it will find is the [federal government policy] comes third ... because it has a reliability requirement that keeps in old, clunky, expensive coal-fired generation at the expense of new, cleaner cheaper renewable technology," he said.
"Why are we choosing the third best option?"
ACT Energy Minister Shane Rattenbury said every jurisdiction had questions about the plan and "there was no love in the room for the [national energy guarantee]".
NSW Energy Minister Don Harwin said exploring options ruled out by the federal government would "just slow things down". However he said the reliability and emissions components of the guarantee needed to be "fleshed out quite a bit".