Qld power bills: Queenslanders to get discounts in major national cabinet win

Queenslanders are set to receive discounts on their power bills as well as price capping, in a major national cabinet compromise that includes the state forgoing coal royalties and dividends in exchange for infrastructure down-payments.

• Bills skyrocket $300 in six months with more pain on the way

Queenslanders are set to receive discounts on their power bills in a major national cabinet compromise struck between the state and federal governments which includes reinstating the funding for the Rockhampton Ring Road and cash for its landmark energy plan.

National cabinet met virtually on Friday to chart a course toward lowering power bills amid a prolonged cost-of-living crisis, with leaders agreeing to a four-part plan.

It includes capping gas prices at $12 per gigajoule for 12 months, capping coal prices at $125 per tonne for 12 months, and putting forward up to $1.5bn in federally-funded payments paid through state counterparts as power bill rebates.

Prime Minister Anthony Albanese, speaking after the virtual national cabinet meeting on Friday, said “extraordinary times call for extraordinary measures”.

“We’re taking urgent action to shield Australian families from the worst impacts of these price hikes,” Mr Albanese said.

Premier Annastacia Palaszczuk confirmed the state and federal governments had struck a deal to lower power prices, with the state-owned energy companies to be directed by the government through existing to law to put the plan into action.

Most of Queensland’s electricity is generated, transmitted, and distributed by state-owned companies including CleanCo, CS Energy, Stanwell, Powerlink, Ergon and Energex.

She said it was unlikely the state-owned energy companies would be financially damaged by the move to cap coal and gas prices for 12 months.

Queensland Premier Annastacia Palaszczuk. NewsWire / Sarah Marshall

Ms Palaszczuk confirmed the federal government had committed to chipping in funds for the state’s $62bn Queensland Energy Plan, including early works on two pumped hydro plants — one near Bundaberg and the other west of Mackay.

She said the details about the size of the contribution would be hashed out at a later time.

Mr Albanese said the federal government was providing financial assistance to consumers through state and territory governments because each jurisdiction had its own system and would put the rebates through in a different way.

Direct cash payments also have inflationary risks, as governments cannot control how people spend their money.

How Queensland distributes the additional rebates will be hashed out by Treasurer Cameron Dick, with Ms Palaszczuk saying the relief should flow through from early 2023.

It comes as a Queensland Auditor-General report released on Friday revealed the state-owned energy companies were posting lower profits amid electricity market instability brought on by war, weather, power station breakdowns and transmission repairs.

And it warned “extreme weather” would challenge the companies into the future.

The report showed wholesale electricity prices in Queensland nearly tripled in the year to 2021/22 and was the highest among states connected to the national electricity market at $162 per megawatt hour on average.

In 2020/21 Queensland’s wholesale electricity price was $61.8 per megawatt hour on average.

Most of Queensland’s electricity is generated, transmitted, and distributed by state-owned companies including CleanCo, CS Energy, Stanwell, Powerlink, Ergon and Energex.

Prime Minister Anthony Albanese. (The Advertiser/ Morgan Sette)

The auditor-general report found there had been a “significant decrease” in the sector’s profits amid price volatility in the market.

Profit overall was $332.2m in 2021/22, down 31 per cent from the previous year.

But returns to customers, through regional customer support and rebates, had increased slightly to a total of $1.1bn in 2021/22.

“Extreme weather conditions continue to cause fluctuations in electricity demand, contributing to upward pressure on wholesale market price,” auditor-general Brendan Worrall noted in the report.

“Entities face challenges in balancing the unpredictable supply of renewable energy such as solar and wind, with delivering stable and reliable electricity supply at affordable prices.

“It is essential (entities) continue to deliver reliable and affordable electricity. Investments in battery and pumped hydro storage can complement the intermittent output of the renewable energy sources, and stabilise the power.”

Energy ministers on Thursday, including Queensland’s Mick de Brenni, revealed they had agreed in principal to set up a new mechanism to ensure the reliability of the electricity system.

Queensland Energy Minster Mick de Brenni with Federal Energy Minister Chris Bowen. Picture: NCA NewsWire / Dan Peled

And it will not involve paying coal power plants to keep the lights on — unlike previously proposed by the former Coalition government.

Instead the so-called “capacity investment mechanism”, facilitated by the Commonwealth, will financially underwrite dispatchable renewable energy projects thus helping get them off the ground faster.

This would benefit the state government’s Queensland Energy Plan and its bid to build two pumped hydro plants.

“What we have decided to do is accelerate sensible market reforms and investment in new energy storage and the grid,” Mr de Brenni said.

“This is about prices because only when the market is dominated by clean, renewable energy will we see wholesale energy prices come down permanently.”

According to federal Energy Minister Chris Bowen the mechanism would “unlock around $10bn of investment in clean dispatchable power to support reliability and security”