Chris Bowen defends price cap as gas producers ‘wrap heads around’ market intervention

The Albanese government has again been forced to defend a controversial move on gas after being slammed over prices.

The Albanese government is again defending its contentious gas price caps, rejecting accusations the unprecedented market intervention introduced a month ago is backfiring.

And gas producers are downplaying claims a supply shortage is to blame, saying they are still “getting their heads around” the price cap.

Woodside’s Mark Abbotsford says consumers could be certain the energy giant is putting “every molecule of gas” it is producing into the market.

Energy Minister Chris Bowen is standing firm against opposition attacks on the intervention that caps wholesale gas prices at $12 a gigajoule for 12 months.

Energy retailers have already suspended taking on new customers, as contracts surge to more than $30 a gigajoule, meaning power bills are still increasing.

Mr Bowen said it would take time for the wholesale cap to flow through to retail prices, but households should not expect their bills to go backwards.

Energy Minister Chris Bowen Minister says the market intervention, which caps wholesale gas prices for a year, is going well. Picture: NCA NewsWire / Gary Ramage

“We were expecting a 20 per cent increase in 2022-23 and then a 20 per cent increase in 2024. That was what the Treasury analysis we put upfront in the budget (said), and we said that was not acceptable to us,” Mr Bowen told ABC Radio.

“The first increase was built into the system, but the second increase we could deal with.”

He said the ACCC had now issued guidance to gas producers that it would enforce to ensure affordable contracts for retailers.

“The government expects them, as the law provides, to supply gas at reasonable prices to Australian firms and individuals,” he said.

He also downplayed concerns of a gas shortage.

Mr Bowen said while power bills were increasing, the market intervention kept them from surging 20 per cent: NCA NewsWire / Brenton Edwards

Mr Abbotsford said Woodside, presumably like other producers, was still “getting their heads around” how to enforce the price cap and weren’t holding back on sup

“We don’t have any available supply that we’re holding back. We’re putting every molecule we possibly can into the market and we’re not only doing that today, but we’re also looking to do that in the medium and long term,” he told ABC Radio.

In response to claims by Industry Minister Ed Husic that retailers are benefiting from “Putin’s profits”, Mr Abbotsford said the company wanted prices at a “more sustainable level” to stimulate investment.

Mr Bowen said he appreciated producers were working to ensure they were complying with the conditions set by the market intervention, while his opposition counterpart Ted O’Brien said the government was not going far enough.

“(Mr Bowen) thinks the intervention is going swimmingly well. Any household that is opening up their power bills today will tell you the opposite,” he told ABC Radio.

“This time last year, all the way through 2022, the Albanese government promised a cut in household power prices, to come down by $275. Everybody knows their policies are failing – prices are skyrocketing and they do not know what they are doing. This is gross incompetence.”

Mr Bowen said power bills would trend downwards when Australia had successfully transitioned its energy supply to renewables.

Originally published as Chris Bowen defends price cap as gas producers ‘wrap heads around’ market intervention