States clash over federal electricity price cap plan


“Queensland is still doing the heavy lifting and we need to make sure that if there is Commonwealth action in that direction, Queenslanders are fully compensated,” she said.

The federal government raised expectations for intervention in the energy sector after the October 25 budget announced that electricity prices would rise by 56% and gasoline prices would rise by 44% over the next two years.

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Albanese is meeting with state and territory leaders next Tuesday evening ahead of a national cabinet meeting on Wednesday to negotiate the plan, after saying he would act in ways that “would not have been contemplated under normal circumstances” before the he Russian invasion of Ukraine drove up coal and gas prices.

Kennedy told Senate Estimates late Monday that retail price caps and subsidies had “unintended consequences” and resulted in “dysfunction” as retailers could incur higher input costs.

“We are in a period of monetary policy tightening. It would be unwise to contribute unnecessarily to demand,” he said of payments to households.

Resources Minister Madeleine King said capping coal and gas prices was an “option on the table”, but the outcome was not yet decided.

When asked if state laws should be passed, King replied, “it is possible.”

Victorian Energy Minister Lily D’Ambrosio issued a more co-operative statement on the federal plans over Queensland’s warnings, saying Victorian households and businesses should not pay European gas prices.

“All options are on the table, including price caps and establishing a strong domestic reserve,” she said.

“We will work closely with the federal government to find a solution that protects our state’s households and businesses from price gouging.”

NSW Treasurer and Energy Minister Matt Kean said “the Federal Government can and must provide a solution” to the rising cost of gas and coal.

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“They can’t half-solve a problem and blame it on others,” he said.

An analysis by energy consultancy EnergyQuest this month said that imposing a price cap of $10 a gigajoule would remove or delay about 700 petajoules of gas production, equivalent to the supply of one year in all of the east coast inland supply, in less than eight years.

EnergyQuest chief executive Graeme Bethune said a $10 price cap would likely rule out the development of the Narrabri gas field planned by Santos in northern New South Wales, a project which King said , would be needed to keep the state from running out of gas.

“It’s understandable that individuals and businesses are concerned about soaring energy prices, but it’s obviously important to carefully consider the long-term effects of different assistance alternatives,” Bethune said.

Bethune said Queensland should be self-sufficient in gas until at least 2032, even with its three LNG export terminals at Gladstone.

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