Price cap to ease power bill pain

THE poorest Australians’ bills will be subsidised by hundreds of dollars over the next 12 months as part of the federal government’s plan to protect consumers from soaring power prices caused by the spike in global gas and coal prices.

Under emergency moves agreed to by state and territory leaders on Friday, Queensland and New South Wales governments will cap the price of coal at $125 per tonne while the commonwealth will limit the price gas companies charge to $12 a gigajoule.

The market intervention, sparked by Russia’s invasion of Ukraine, will last a year and will see the federal government and states between them spend $3bn on relief.

The government estimates that the move will limit the rise in wholesale electricity prices to 23 per cent in the next financial year. Without the unprecedented market intervention it thinks wholesale power prices would instead rise by 36 per cent. The difference between the two increases is estimated to leave the average household about $230 a year better off than they would be if nothing was done.

The package is also expected to cut half a percentage off inflation in 2023-24.

Prime Minister Anthony Albanese said “extraordinary times call for extraordinary measure”, announcing that federal parliament will be recalled next week to legislate the agreement. “Together this package is a constructive plan – it’s a constructive plan to deal with the challenges that households and businesses are facing,” he said.

States and territories will provide subsidies to cut the power bills of pensioners, people who are receiving family tax benefits, and people who are receiving Jobseeker as well as small businesses.

Opposition leader Peter Dutton said Mr Albanese had said 97 times before the May election that power prices would reduce by $275 if he was elected. “Now that is dead and buried in the announcement today,” he said.