Coal price cap decision not yet reached

Maeve Bannister and Andrew Brown | December 8, 2022

Australia’s political leaders have not yet reached a decision to cap coal and gas prices but “temporary” interventions are on the table.

Energy Minister Chris Bowen has met with state and territory counterparts to discuss long-term strategies to drive down power prices and the next steps in Australia’s transition to renewables.

All agreed to a capacity mechanism, something Mr Bowen said had been in the “too hard basket” for too long.

“This is a big step forward, energy ministers have been unable to agree about the way forward on this in the past,” he told reporters in Brisbane. 

“This is one team, what jurisdiction doesn’t matter … one team working together to get the job done on behalf of the Australian people.”

Mr Bowen said further announcements on a plan to tackle energy prices would come out of national cabinet on Friday when Prime Minister Anthony Albanese meets virtually with premiers and chief ministers.

“It is not the fault of Australians our power prices are so high. The cost of production hasn’t gone up,” he said.

The proposed capacity mechanism is expected to guarantee energy supply without undermining emissions targets or being used as an excuse to keep coal and gas generators operating. 

Asked if the government had resolved to cap the wholesale coal price at $125 and the gas price at $13 a gigajoule, Treasurer Jim Chalmers said no. 

He said one level of government could not work alone to address the issue and it needed collaboration from all. 

“We are very concerned at the prospects of higher energy prices … There is a case here for temporary, responsible, sensible but meaningful interventions in the markets, to see if we can take some of the sting out of these high energy prices,” he said. 

“This is a challenge of such complexity and such consequence for industry and for Australians around the country, that it needs to be a genuine partnership between governments.”

Victorian Premier Daniel Andrews told reporters while the onus was on the federal government to put an energy plan forward, the states would consider it.

“We will give that the proper and important consideration but no, I can’t commit one way or the other,” he said.

“A national domestic gas reserve is very important. 

“We should not be paying European prices for our gas. Our gas should be for our households and our businesses first.”

But NSW Energy Minister Matt Kean said his state was almost set to sign up to a price cap on coal.

Mr Kean said NSW was “prepared to take the hit”, indicating consumers needed to come first and not royalties to the state government.

Federal opposition spokeswoman Karen Andrews said the government was yet to explain what is was planning and how this would affect consumers and had not confirmed if negotiations with energy generators had taken place.

“The federal government hasn’t gone in with a longer term plan, a longer term vision … and now they’re in a position of scrambling around,” she said.