‘Prices won’t come down’: Power bills won’t drop with coal cap, expert says

Electricity bills will still continue to rise with the next hit to come from July 1, even if the Albanese Government secures an agreement to cap coal and gas prices, analysts are warning.

Electricity bills will still continue to rise with the next hit to come from July 1, even if the Albanese Government secures an agreement to cap coal and gas prices, an energy analyst is warning.

Prime Minister Anthony Albanese on Tuesday said there would be “no delay” in addressing the soaring power bills, after a pivotal national cabinet was delayed from Wednesday to Friday due to his Covid diagnosis.

But the Grattan Institute’s director of energy and climate change Tony Wood said the unprecedented high wholesale power prices from June and July, caused by the failure of Callide C power station and coal mines flooding amid other events, had yet to be passed on and would be felt from July.

Prime Minister Anthony Albanese. Picture: The Advertiser/ Morgan Sette

He said if the government “waved a magic wand” and capped coal and gas prices, it would not be able to decrease residential power bills.

“You wouldn’t see prices come down, they just wouldn’t go up by as much as projected,” he said.

The Commonwealth, as of Monday night, had not yet presented the states with its final proposal on how to tackle prices, but it has been pushing for coal and gas price caps.

The Australian Energy Regulator will set the next default market offer for retail electricity bills in February, but this will not flow through to household bills until at least July 1.

Mr Albanese ramped up pressure on states reluctant to sign up to plans to cap coal and gas prices, with Queensland among the most vocal.

“State Premiers all know that there is real pressure on manufacturing industry, that there’s pressure on households,” Mr Albanese told ABC radio.

“They know that they have an interest in ensuring that some of that pressure is alleviated.”

Queensland owns its power generators, CS Energy and Stanwell which in turn own coal mines which supply their fuel.

This coal is supplied through long-term contracts at significantly lower prices than the $400 per tonne plus on the international market.

Mr Wood said it meant the state-owned generators would miss out on “a huge windfall profit” if a price cap was implemented.

Energy Minister Chris Bowen coal in particular would be a focus of discussions with the premiers.

Energy Minister Chris Bowen. Picture: NCA NewsWire / Martin Ollman

“Short-term imperative is in nobody’s best interest, nobody’s best interest to see Australian industries under pressure from rising energy prices,” Mr Bowen said.

“This crisis is caused by coal and gas prices. Anybody who says it’s caused by renewables is lying.”

Mr Albanese said delaying national cabinet would have “zero impact” on when any benefits were passed on to households.

“What we’re looking at is trying to act before Christmas, which is what we said we would do. There’s no actual delay in anything except the formal meeting that will take place now on Friday,” Mr Albanese said.

“The idea that you make a decision, and it has an impact immediately on prices is not right.”

Originally published as ‘Prices won’t come down’: Power bills won’t drop with coal cap, expert says