Industry group says energy deal messy but good for users

Innes Willox, chief executive officer of the national employer association Ai Group, said soaring prices for coal and gas have been threatening intense pain for businesses and households across eastern Australia.

“All the response options had shortcomings, but something effective needed to be done,” he said.

On Friday (9 December), the national cabinet met to discuss the government’s Energy Price Relief Plan and has made a commitment to take action to limit gas and coal prices and to provide targeted energy bill relief for households and businesses.

The cabinet agreed to a temporary cap on the price of gas and to tackle high gas prices by the Commonwealth 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.

It also will introduce 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.

The NSW 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.

These measures are expected to dampen predicted gas price increases by 2 percentage points in 2022–23 and 16 percentage points in 2023–24 and 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.

The Commonwealth government will also 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.

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 small-business customers of electricity retailers.

Mr Willox said the coal and gas price caps agreed to are not a long-term or preferable solution.

“They will be messy to implement and it would be better if we were not still so vulnerable to gyrations in these global fuel markets,” he said.

“But they look likely to be very helpful in dampening the immediate economic pain of this global energy crisis. Caps will need to phase out as soon as they can, depending on the evolving situation in global energy markets and Australia’s progress in speeding our supply and demand-side energy transitions.

“There is a lot to digest from these announcements. We’ll be consulting our members and feeding into the next phase of design on the CIS. At this early stage, however, we are relieved that Australia’s governments have listened to industry, accepted the reality of this crisis, and are working together to respond effectively.”