Fight brews as government mulls plans to cap gas prices

At least one state is squaring up for a fight with the federal government as it considers gas price caps and other interventions to curb Australia’s spiralling energy bills.

As the Commonwealth prepares to intervene with a nationwide curb on power prices, Queensland Premier Annastacia Palaszczuk warned late on Tuesday that her state would not sacrifice energy rebates enjoyed by Queenslanders.

Prime Minister Anthony Albanese’s cabinet is expected to go ahead with a new strategy to limit power price rises across the country after the federal budget forecast two years of rising household energy bills.

The government is working out the details of how gas prices can be capped, and crafting a policy that may include subsidies.

The ABC reported on Tuesday that the plan would likely include a cap on wholesale gas prices at about $12 a gigajoule, demands for a guaranteed domestic gas supply from producers, and a mandatory code of conduct as part of a market intervention first flagged five weeks ago.

The details are expected to be made public as early as next week, when Mr Albanese will lead a national cabinet meeting and Energy Minister Chris Bowen will meet his state counterparts.

Market ‘out of control’

However, a $12 cap would be too high for the Australian Council of Social Service and the Australian Workers’ Union, which said on Tuesday a wholesale price lid should be closer to the five-year average spot price of $8 to $10 a gigajoule.

Prices have been three times that this year in most markets, according to the Australian Energy Regulator.

“This is a market that is out of control at this time,” ACOSS CEO Cassandra Goldie said on Tuesday.

“We need to protect people from the ravages of what is happening to the price of the energy bills they are receiving.”

ACOSS and the AWU said any intervention must also include price caps on coal and electricity, be complemented by commitments to encourage energy efficiency for households and industry, and consider the broader tax arrangements applying to resources companies to ensure the current crisis was not repeated.

Almost everybody on income support was already in severe rental distress, making increases in electricity prices particularly alarming, Ms Goldie said.

“They do not have room to move on their budgets.”

Households have no room to move on their budgets.

The government is reportedly yet to settle on a decision on what to do about coal prices, which have soared on the back of the Russian invasion of Ukraine.

AWU national secretary Dan Walton said without action on energy, Australia was perilously close to job losses and quality manufacturers going under.

“Our nation was set up with energy being our competitive advantage,” he said.

“That competitive advantage is disappearing into the back pockets of multinational gas companies and multinational coal companies.”

Mr Walton expressed frustration at how long the government was taking to come up with a plan.

“We’ve seen them nodding and saying they agree, yet we don’t see a solution,” he said.

“If we don’t get a solution wrapped up by Christmas, we are going to see many, many, many good quality workers out of a job.”

State’s ‘heavy liftng’

On Tuesday, Ms Palaszczuk told Queensland’s parliament that her state was doing the “heavy lifting” on gas production and she would seek compensation if the Commonwealth intervened in supply.

“Let me say very clearly to the federal government – hands off our generators,” she said.

Annastacia Palaszczuk says Queensland is doing the ‘heavy lifting’ on gas production. Photo: AAP

“There is no way that Queensland is going to sacrifice those returns [rebates] that we are able to provide back to Queenslanders.

“Queensland is always doing the heavy lifting and we need to make sure that if there are any steps by the Commonwealth in this direction that Queenslanders are fully compensated.”

Ms Palaszczuk suggested NSW and Victoria could “open up some of their gas fields” to curb supply issues in the south.

Earlier on Tuesday, Federal Resources Minister Madeleine King said the government was considering capping gas prices as part of an overall policy to drive down electricity prices.

The government was in discussions with the states and territories on the policy, she said.

“Price capping is but one option and that is why … the government needs to be very considered on this and very precise in its response.”

In the recent budget, Treasury forecast retail power prices would rise 20 per cent by late 2022 and another 30 per cent in 2023-24.

-with AAP

Topics: Gas prices
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