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Federal parliament will be recalled before Christmas to pass laws to enforce price caps on coal and gas under a national deal on energy that aims to ease pressure on household bills next year.
The price controls are a drastic new measure to shield Australians from a global energy shock, imposing a cap of $125 per tonne on coal – half the rate on the spot market – and about $12 per gigajoule on gas for electricity generators and other big energy users.
But the framework will need further talks between Canberra and the states to decide the financial assistance that can guarantee savings, most likely by offering taxpayer help to retailers before they send bills to households.
Prime Minister Anthony Albanese reached a broad agreement with state and territory leaders on Friday to impose the new regime after planning the policy for weeks and declaring he wanted a solution by Christmas.
“I’m pleased to announce there was agreement at the national cabinet on the way forward to provide energy price relief for household and for businesses,” he said after the meeting.
While the big coal-producing states of NSW and Queensland will impose the price controls on coal for domestic customers – while leaving export contracts alone – the gas controls will be done by the federal government and will require parliament to meet in the next weeks.
The national cabinet meeting, held online because Albanese has COVID, concluded after 90 minutes of talks, but it struggled to get a final deal on the amount to be paid in financial assistance because of differences between the states.
Albanese said the agreement was to take “urgent action” across federal and state governments to deal with the energy shock caused by the Russian invasion of Ukraine.
Firstly, the Commonwealth will take action on gas with a mandatory code of conduct for the next 12 months to set a price of $12 per gigajoule.
Parliament will be recalled next week to deal with the legislation needed to enforce this cap.
The second element would be an agreement between the federal, NSW and Queensland governments on the $125 cap on coal, with the states expected to use their powers (a change to the law in NSW and an existing regulation in Queensland) to enforce this cap.
Albanese acknowledged the concerns in NSW about the impact on the cost of production and said the Commonwealth would provide support for that.
The Commonwealth will provide $1.5 billion to provide relief for households and small business, paid through state governments to reduce people’s bills.
Albanese said this would be better than offering cash handouts because the cash payments would add to inflation.
“It will also be temporary but will start in the second quarter of 2023,” he said.
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