Coal-fired national cabinet: Fiery showdown looms over coal price cap

Queensland has sought legal advice on the federal government’s plan to cap coal prices to bring down soaring power bills, with the Premier to “firmly” push back if the state isn’t given a fair deal.

• Editor’s view: Power price flashpoint

Queensland has sought legal advice on the federal government’s plan to cap coal prices to bring down soaring power bills, with Premier Annastacia Palaszczuk signalling she would be “firmly” pushing back against the plan if the state isn’t given a fair deal.

The federal government has proposed state governments impose a cap on coal prices as part of a plan to bring down wholesale energy costs, though it has not stated where the cap should be set.

The plan is set to spark a fiery clash at national cabinet on Wednesday, as premiers fear it could cost them revenue and compensation claims, but it’s understood the cap on coal prices is one part of a broader proposal and isn’t the only option on the table.

Queensland and New South Wales have bristled as the price-cap proposal, with Ms Palaszczuk signalling the state would require compensation to make up for lost dividends generated by the state-owned coal-fired power generators.

Queensland still owns its power generators Stanwell and CS Energy – which in turn own coal mines to supply them with fuel – meaning it has more to lose than other states.

“As I said very clearly we’ve set down our parameters. Millions of Queenslanders own our assets. Some of those profits are going back to Queenslanders in terms of direct assistance for our households,” the Premier said on Monday.

“There would have to be adequate compensation … we would have to be very, very convinced that no Queenslander would be worse off.”

Premier Annastacia Palaszczuk

Ms Palaszczuk declined to elaborate on how big the compensation package would need to be.

If it is decided coal price caps should be brought in, state parliaments including Queensland would need to be recalled, however Ms Palaszczuk said she did not anticipate having to call parliament back “at the moment” but would see which way conversations go.

Any cap introduced is unlikely to impact on the state’s royalties scheme, as it would likely apply to domestic use rather than exports.

In light of the price cap proposal, the NSW Government sought legal advice from its solicitor general, revealing the Commonwealth had the power to implement its own price caps on coal, but under the Constitution, would have to do it “on just terms” by compensating coal producers.

Ms Palaszczuk confirmed the state government had done the same, but would not disclose details or if the legal advice was similar to what NSW had received.

Government Services Minister Bill Shorten

State Environment Minister Megan Scanlon said the state was still waiting to see the recommendations that will be put forward at national cabinet.

“The Premier obviously will ensure Queenslanders get a good deal,” she said.

“The beauty of having these assets in public hands is that we can make sure that any money made doesn’t go back to corporate shareholders, it goes back to Queenslanders, and we did that most recently through the $175 power rebate.”

Government Services Minister Bill Shorten said the energy price crisis was a national challenge.

“This is about taking pressure off families, off businesses,” he told Sky News.

“Prime Minister Anthony Albanese has been very clear that all options are on the table, so let’s see what emerges from the discussions on Wednesday.”

He said the federal government needed to bring the state’s on board with any plan, but that Mr Albanese had a “less antagonistic” approach to state relations than the previous government.

Ms Palaszczuk last week gave a stern warning to the federal government to keep their “hands off our generators”.

“There is no way that Queensland is going to sacrifice the returns that we are able to provide back to Queenslanders,” she told Parliament.