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Energy Minister Chris Bowen has conceded the government's plan to ease household energy prices will not be a "magic bullet", but is the biggest lever it has to try to alleviate spiralling costs.
Key points:
- State and federal governments agreed on Friday to cap wholesale gas and coal prices
- Oil and gas industry representatives say the plan will destroy investor confidence
- Federal parliament will return on Thursday to put the price caps in place
State and federal governments announced a plan on Friday to cap wholesale gas and coal prices to prevent steep price rises in the coming year.
There will also be subsidies for households relying on Commonwealth payments.
The government says the measure is needed after the dramatic increase in prices due to the ongoing war in Ukraine.
Mr Bowen said federal parliament would return on Thursday to pass the bill putting the price caps in place.
"We are not suggesting this solves all the problems in the energy market forever," he said.
"We were facing price rises next year of 36 per cent, that's the latest figures, that's not acceptable, either you intervene and you take the sting out of those price rises or you don't.
"Australian consumers would have been $230 worse off next year without these actions.
"We are certainly not saying this is a magic bullet and we'll see energy prices fall. What we are suggesting is that this takes the big impact of the increases out of the system."
Under the scheme, wholesale gas prices will be capped at $12 a gigajoule and coal at $125 a tonne for a year.
A total of $1.5 billion dollars will be made available to help those most in need.
"It's not inflationary because it reduces the bill before it arrives in the letter box," Mr Bowen said.
Industry says plan is 'opposite' of what is needed
Lynne Gallagher from Energy Consumers Australia said the package of measures would protect households and small businesses from excessive bill shock.
But she said more details were needed as soon as possible to explain how the plan would affect bill increases in different states.
"Australians have already seen bill rises of 20 per cent this year and are understandably anxious about what the future holds," she said.
Samantha McCulloch from the Australian Petroleum Production and Exploration Association (APPEA) said the industry acknowledged the problem of high prices on consumers.
But she said the current plan had gone the wrong way about it and had dismantled the Australian gas market.
"It will do the opposite of what's needed," Ms McCulloch said
"It will destroy investor confidence in bringing on new supply and that's the key to bringing down prices.
"You don't fix the system by making it more complex.
"To truly address the high cost of electricity that is hurting households, business and the mining sector, governments must act quickly to increase the supply of gas into the market."
Mr Bowen said it was a necessary step to address the problem.
"It's Australian gas under Australian soil and Australians should not be paying elevated war prices for that gas," he said.
The government is hoping to see action by the first quarter of next year.