Major changes could reduce power bills

Gas companies face the prospect of price caps under interventions being considered by Labor to bring down soaring energy costs.

The Albanese government’s first budget forecast a 56 per cent increase in electricity prices over the next two years, with gas prices also tipped to rise 44 per cent in the next 18 months.

Jim Chalmers couldn’t say on Sunday when he expected power bills to come down.

Speaking to the ABC’s Insiders program, the Treasurer said the government was looking to make a voluntary code of conduct for the gas industry mandatory in an effort to secure supplies and get a handle on prices.

Mr Chalmers said the government was considering making price caps part of the code to control the amount gas companies could charge for their product.

The chair of the Australian Energy Regulator has warned that the government must act quickly if it is to make market interventions, before new contracts with gas companies are finalised by the end of November.

Former Australian Competition and Consumer Commission chair Rod Sims has urged the federal government to threaten gas companies with export controls to get them to divert enough supply to bring down prices.

Mr Chalmers said he took Mr Sims’ proposals “very seriously”.

“We obviously acknowledge that very high gas prices are putting extreme pressure on Australians and on Australian industry,” he said.

“There’s a lot of work going on behind the scenes, a lot of consultation and collaboration and if there’s something sensible and responsible and meaningful we can do here, obviously we will consider that.”

Mr Chalmers signalled the government would consider raising the petroleum resource rent tax (PRRT) to collect more revenue from gas companies.

“We do want to make sure that Australians get a good return for their resources, we need to balance that against the investment that’s been made into the sector,” he said.

He said he would “take seriously” the recommendations from a Treasury review of the PRRT arrangements, which is under way after being commissioned by the former Coalition government.

Before the May election, Labor promised to lower average power bills for households and businesses by $275 a year by 2025. The pledge may not eventuate.

Prime Minister Anthony Albanese has blamed the war in Ukraine and the Coalition for spiralling costs.

“We understand that there’s enormous pressure on people’s budgets as a result of the Russian invasion of Ukraine, but also as a result of the wasted decade when we had four gigawatts of energy leave the system and only one gigawatt return,” the Prime Minister told reporters on Sunday.

“So we’ll examine what we can do to take pressure off energy prices, as we already have done in seeking agreement from the gas producers.”

Labor frontbenchers have accused the former Morrison government of not making the forecast rise in energy prices public until after the election.

Opposition employment spokeswoman Michaelia Cash rejected this claim on Sunday, as she cautioned against introducing price caps and said Labor needed to focus instead on shoring up gas supplies.

“All a price cap will do is actually discourage players from bringing on supply,” Senator Cash told Sky News.

“Where is their plan to bring on supply? There is none.”

Australia has this year grappled with shortages and vastly inflated wholesale prices of gas despite being one of the world’s largest producers of liquefied natural gas.

Unions have called on the government to introduce a national domestic gas reservation policy — similar to that which exists in WA — that requires a proportion of gas produced in Australia be kept here.

Resources Minister Madeleine King last month struck a deal with the three east coast gas exporting giants – Santos, ConocoPhillips, and Shell – to set aside more than 150 petajoules of gas for the domestic market next year.