Power price relief to flow from coal and gas caps, Energy Minister Chris Bowen vows

The Albanese government has brushed aside industry criticism that caps on gas and coal prices will cripple investment saying they are desperately needed to make sure Australians are paying a ‘fair’ amount on their bills.

Federal Energy Minister Chris Bowen defended the decision to keep a lid on wholesale gas and coal prices on Sunday saying Australians should not be having to pay ‘wartime prices’ because of the conflict in Ukraine creating a worldwide shortage.

‘This argument really goes to say we believe we need profits as high as we can get during a war, during a global energy crisis for our industry to be viable, nobody is going to believe that because it’s just not true,’ Mr Bowen told Sky News.

‘This is Australian gas on Australian soil and Australians should pay a fair price but they shouldn’t be paying a wartime price.’

Mr Bowen argued that without price controls and $1.5bn given to the states and territories to spend on power bill rebates many business would be facing bankruptcy.

‘There were businesses and industries saying very clearly that they would have a lot of difficulty surviving next year, In the face of gas prices, electricity prices being what they were,’ he said.

‘We’ve come up with a very, very strong package which deals with both the key inputs to these elevated prices.’

Energy minister Chris Bowen insists the Albanese government’s new package of measures will provide much needed relief from soaring power costs

While Mr Bowen insisted the measures would ‘see real relief flow through to those who need it most’, even though he admitted they were no ‘magic bullet’ and would only be temporary.  

‘We are not suggesting this solves all the problems in the energy market forever,’ he said.

 Under the agreement reached on Thursday between the Albanese government and state and territory leaders, gas prices will be capped to $12 a gigajoule for 12 months, while coal will be temporarily capped at $125 a tonne,.

A mandatory code of conduct will be put in place for the gas industry, with federal parliament to be recalled next week to pass the legislation.

Opposition energy spokesman Ted O’Brien said the Albanese government’s plan would ‘ruin’ Australia’s coal and gas sectors, hurting the economy overall.

‘The legislation I read yesterday is a disaster, it is a monster in the making because it not only will fail in the short term but it will have a disastrous effect on the industry over the longer term because it kills supply,’ Mr O’Brien told Sky News.

Mr Bowen said that businesses had been pleading for help with sky-rocketing energy prices, which are forcing many to the verge of bankruptcy

Mr O’Brien accused the Albanese government of preparing a panicky bill that they had done no modelling on and could not explain fully.

‘I predict again it will be this time next year, the same hollow promises from a government that has been completely inept,’ he said.

While Mr O’Brien welcomed the $1.5bn to be handed out as power rebates he said putting caps on prices would drive away investors in coal and gas, which would create long-term supply problems.

‘They have mismanaged, which is why prices have gone through the roof,’ Mr O’Brien said.

‘The grid is wobbling and now we have an awful situation, an awful situation with sovereign risk because of what the government is now purported to do.’ 

The Opposition has warned that putting price controls on coal and gas could hurt Australia’s long-term supply

Treasurers are set to work through the government’s relief package for each state and territory. 

Financial relief for energy bills is expected to begin in the second quarter of 2023.

Prime Minister Anthony Albanese said the bill relief would not be direct cash handouts, to protect inflation levels.

‘It will not be the same plan in each state and territory, given each of them have different systems,’ he said.

‘That is part of the complexity of what we have been dealing with is the fact that we have eight different systems around the country.’

Mr Albanese said extraordinary measures would be taken to lower the cost of energy.

‘We’re taking urgent action to shield Australian families from the worst impacts of these price hikes,’ he said.

‘We’re working hand in hand with our state and territory partners to find the best outcomes for all Australians.’