The federal government passed a bill on December 15 that caps wholesale gas prices at $12 per gigajoule for the next twelve months. Labor will also support New South Wales and Queensland governments limit wholesale coal prices to $125 a tonne.
The measure is an attempt to limit fossil fuel corporations'聽price-gouging: they have made record profits since the Russian invasion of Ukraine began.
to energy minister Chris Bowen, 96% of gas sold in 2021 was for less than the new $12 price cap. The average price was $9.20. By contrast, short-term gas prices on Australia's east coast $26 in the third quarter of this year.
This price difference is a result of big companies' profiteering since the cost of production has not聽substantially increased.
According to (TAI), the gas and coal companies have made up to $85 billion in 鈥渆xtra鈥 windfall profits in the last year from export sales.
鈥淲indfall profits to coal companies in 2021-22 were between $39 billion and $45 billion鈥 and 鈥済as exporters reaped windfall profits of between $26 鈥 $40 billion鈥, TAI said.
The government secured the Greens' support with a of a 鈥減ackage of support to [help households] switch to high quality electric appliances that will lower power bills for people, including low and middle income households and renters鈥.
The details of this package will be worked out in the lead up to next year鈥檚 budget. The Greens 聽that 鈥渉ouseholds could save $1,900 per year by switching from gas appliances alone and up to $3,450 per year by fully electrifying鈥.
In the lead up to the vote, the Greens were arguing against government compensation to the fossil fuel giants. 鈥淭he greedy coal and gas corporations should be compensating people, not the other way around,鈥 Greens leader Adam Bandt on December 12.
鈥淚t's a bad day to be a greedy, tax avoiding gas corporation,鈥 Bandt after the bill passed, adding, 鈥渢he writing's on the wall for gas鈥.
However, large domestic industrial operations powered by gas will be some of the biggest beneficiaries of the聽new policy. This, combined with the fact that most gas industry profits come from exports, mean that the package is more like a slight clipping of their wings than a death blow for the gas industry.
The final package does not include direct subsidies for the fossil fuel companies, but it is unclear if the deal with聽NSW and Queensland will involve state subsidies to coal companies.
Federal Labor聽will allocate $1.5 billion to the states to assist 鈥渧ulnerable鈥 people and 鈥渟mall businesses鈥 with their power bills from April. State treasurers will work out details about who will benefit from this next year.
Prime Minister Anthony Albanese on December 9 that household power bills will continue to rise. 鈥淭he reality is that due to global circumstances and a decade of energy policy mismanagement, Australians will continue to still see high energy prices for some time.鈥
He claimed that, despite the expected increases, households will be $230 better off than if his plan didn鈥檛 pass.
Bandt said that 鈥渦nder Labor鈥檚 scheme power bills will still keep rising, so the Greens will keep pushing for a 2 year bill freeze instead so people have more cash in their pockets to meet the rising cost of living鈥.
The gas industry is about the package, in particular a long-term 鈥渞easonable price provision鈥 that will come into effect after the temporary price cap expires.
Bowen indicated that this measure simply ensures the gas industry could 鈥渘ot expect to charge its high export prices in the domestic market鈥.
The Coalition voted against the package.