Chalmers says price cap plan on track to ease power bill pain

The Albanese government says a reduction in electricity price rises forecast by the energy market is due to its energy price relief plan.

Treasurer Jim Chalmers. Picture: Liam Kidston

The Albanese government says a reduction in electricity price rises forecast by the energy market is due to its energy price relief plan, and shows it is on track to reduce the increase in power bills by an average of $230.

Jim Chalmers released Treasury analysis of ASX electricity futures data late on Friday, as the Australian Energy Council indicated any reduction in price rises for households resulting from the government’s gas price cap is unlikely to be seen until 2024.

Announced in December, the energy price relief plan included an agreement with the NSW and Queensland governments to effectively set ceilings for the price of coal used for electricity generation at $125 per tonne.

At the time, the government said the measure, combined with a 12-month gas price cap of $12 per gigajoule, would reduce the expected wholesale electricity price increase in 2023-24 from 36 per cent to 23 per cent, and bring expected wholesale gas price rises down from 20 per cent to 18 per cent in 2022-23 and 20 per cent to 4 per cent 2023-24.

The Australian revealed on Wednesday the most competitive household gas prices on the east coast have already risen by an average 19 per cent across Queensland, NSW, Victoria and SA combined since June, ahead of price rises from major retailers of as much as 27 per cent, set to kick in on February 1.

The new Treasury figures compare 2023 wholesale electricity prices in November (prior to the release of the government’s policy) with those from December, and show forecast wholesale prices for 2023 have dropped by 44 per cent in Queensland, 38 per cent in NSW, 32 per cent in South Australia, 29 per cent in Victoria and an average 36 per cent across the four states. The government says this means it remains on track to deliver retail electricity bills on average $230 lower than they otherwise would have been in 2023-24.

“The price rises … forecast were untenable and that’s why we acted. Our intervention will help take some of the sting out of power prices for families and businesses,” Dr Chalmers said.

“Our package is responsible and reasonable, timely and targeted. This isn’t an overnight fix, it’s going to take some time, but it’s heartening to see the plan is already starting to work.

“It’s important that we start seeing these forecast price improvements flow through to consumers. I’ve spoken to the ACCC and they will be watching this closely. The rules are clear and so are the consequences for breaching those rules.”

Energy Minister Chris Bowen. Picture: NCA NewsWire/Dan Peled

Energy Minister Chris Bowen said Australian families, small businesses and manufacturers had become victims of Russian President Vladimir Putin’s “weaponisation of energy, which caused 90 per cent of global electricity price rises last year”.

“The Albanese government took the urgent action required to shield Australian families and businesses from the worst of these price spikes, and this data shows it’s having a big impact already,” Mr Bowen said.

Australian Energy Council chief executive Sarah McNamara said she expected the gas price cap, which was never going to have an “overnight and immediate effect”, would deliver energy bill relief for consumers in 2024.

“We would expect that in the following financial year and calendar year, or probably around 2024, we will start to see the gas price cap impact residential customers, but really the point of the gas price cap was always to mitigate against future price rises rather than have the capability to impact prices this year,” Ms McNamara told ABC radio.

“These things do take time and gas is contracted in advance.”