After months of speculation, the Federal Government has bitten the bullet and announced a temporary cap on both gas and coal prices as part of its Energy Price Relief Plan.
Prime Minister Anthony Albanese said the urgent action, taken in partnership with state and territory governments, would shield Australians from the worst impacts of predicted energy price spikes, and deliver responsible and targeted relief to families, small businesses and manufacturers.
Albanese said the plan would:
- Take action to limit gas and coal prices
- Provide targeted energy bill relief for households and businesses
- Invest in cleaner, cheaper, more reliable energy for the future.
“We are experiencing sustained and unprecedented pressure on global energy markets. Russia’s illegal invasion of Ukraine is pushing energy prices to historic highs all over the world,” he said.
“The action is designed to provide all Australians with a buffer in unprecedented times.
“This coordinated national approach continues the Government’s strong record of working constructively with States and Territories to address problems facing all Australians. It ensures that jurisdictions play their critical role in easing energy market pressures.”
At a meeting of National Cabinet on Friday, the Prime Minister and First Ministers agreed on the following:
Temporary cap on the price of gas and other measures
Introducing a 12-month emergency gas price cap, to be set at $12 per gigajoule on new wholesale gas sales by east coast producers subject to consultation; introducing a mandatory code of conduct for the wholesale gas market that includes a reasonable pricing provision, accelerating the introduction of the AGDSM; and boosting resources for the ACCC for implementation, monitoring and enforcement.
Temporary cap on the price of coal
The New South Wales and Queensland Governments are taking action by effectively setting ceilings for the price of coal used for electricity generation to $125 a tonne, with the Commonwealth to contribute to costs.
“The reality is that due to global circumstances and a decade of energy policy mismanagement, Australians will continue still see high energy prices for some time,” Albanese said.
“The average family would be $230 worse off next year if we do not take action.
Combined, these gas and coal measures are estimated to:
- Dampen predicted gas price increases by two percentage points in 2022-23 and 16 percentage points in 2023-24
- Reduce the impact of forecast electricity price increases of 36 per cent in 2023-24 by 13 percentage points, preventing a $230 increase that the average Australian household would have seen if these actions were not taken
- Reduce expected inflation in 2023-24 by around an estimated half percentage point.
Targeted energy bill assistance
The Commonwealth Government will partner with States and Territories to deliver targeted and temporary relief on power bills to eligible Australian households and small businesses that are customers of electricity retailers.
The Commonwealth will establish an Energy Bill Relief Fund with up to $1.5 billion to deliver relief directly to electricity bills. Commonwealth support will be contingent on the relevant State or Territory matching funding on a dollar-for-dollar basis.
This targeted and temporary support will provide hundreds of dollars of additional bill relief to eligible Australian families and small businesses and help shield them from the worst impacts of rising global energy prices.
National Cabinet agreed to finalise the design and delivery of the energy bill relief based on the following principles:
- Bill relief will be jointly funded between the Commonwealth and relevant State or Territory on a dollar-for-dollar basis
- Contributions will constitute additional support above and beyond any existing or announced schemes
- Bill relief will be targeted to households receiving income support, pensioners and Commonwealth Seniors Health Card holders, Family Tax Benefit A and B recipients and to small business customers of electricity retailers
- Relief be provided as a credit directly on recipients’ power bills.
It is expected that the final details and funding arrangements will be settled by National Cabinet by March 2023.