Industry ‘exposed’ by coal price cap

The $125 per tonne cap on coal prices pushed through the NSW parliament on Wednesday will leave industry exposed, the Australian Workers Union has warned.

Australian Workers Union national secretary Daniel Walton says he supported the cap but was worried that major employers were left exposed by the laws. Picture: Grant Wells

The $125 per tonne cap on coal prices pushed through the NSW parliament on Wednesday will leave industry exposed because the price of coal sold to steel, chemical and cement facilities has not been similarly capped, the Australian Workers Union has warned.

The price cap, expected to save households $230 a year on power bills, only applies to coal used for domestic electricity consumption.

The energy legislation supports an approach agreed on by national cabinet to cap coal and gas prices to reduce pressure on electricity bills, and aligns with measures passed in federal parliament last week. Those measures, passed with the support of Greens and teal independents, included a gas price cap of $12 per gigajoule for 12 months and $1.5bn in targeted bill relief for low and middle-income households and small businesses.

The NSW Parliament was not scheduled to resume until after the state election in March but was recalled to legislate the coal price cap.

AWU national secretary Daniel Walton said he supported the cap but was worried that major employers were left exposed by the laws.

“The main reason our union has been campaigning so hard for a cap on coal prices was that we knew steel, chemical and cement producers were facing unsustainable prices,” he said.

“Worryingly, that will still be the case under the legislation passed by the NSW Parliament today ... factories that purchase coal directly for their operations will not enjoy the caps.

“That means their future in this state will be wobbly at best.”

Mr Walton said he was “surprised and disappointed” that the new laws had not been designed to protect these workers.

NSW Opposition leader Chris Minns supported the legislation but blamed the government’s zeal for privatisation for driving up power bills.

Mr Walton said he understood Mr Minns’ support for the price cap “but it does leave the problem unaddressed.”

NSW Energy Minister Matt Kean defended the price cap, telling Sky News “we’re not on the side of energy bosses”.

“What we’re doing is implementing the Commonwealth government’s proposed price caps, because we want to ensure that we put downward pressure on energy bills for households and businesses,” he said.

A string of the industry’s biggest players – including Woodside, Origin and BHP – have hit out at the legislation with claims the caps would trigger an investment drain and supply gaps.

But Mr Kean said the NSW government’s end goal was to protect consumers.

“The modelling here in NSW shows that a price cap set at $125 will lower household bills by about $230 compared to if the price cap wasn’t put in place, so this is about easing pressure on households and businesses because of rising energy costs due to war in Ukraine,” he said.