a 12-month gas price cap of $12 a gigajoule,create a framework for a mandatory code of conduct for gas companies,and authorise $1.5 billion for power subsidies for households and small businesses.
Energy Minister Chris Bowen addresses the media on Wednesday.Alex Ellinghausen
Energy Minister Chris Bowen announced on Wednesday afternoon that the government had secured the passage of the bill,locking in the support of the Greens in the Senate by promising a “significant package” of measures in next year’s federal budget to help households and businesses to switch from gas to electric appliances.
The deal will provide subsidies for low-income households to allow them to replace old gas heaters,stoves and other appliances and will also look at support for small businesses to upgrade.
Bowen said the legislation would ensure the sting would be taken out of energy price rises – Treasury modelling that has not yet been made public has estimated the new measures will shave $230 off the increase in power bills next year. Crossbench senators David Pocock,Jacqui Lambie and Tammy Tyrrell will also back the legislation.
Opposition Leader Peter Dutton accused the government of using the bill as a “political wedge”,confirming the Coalition supported the $1.5 billion in assistance measures,but did not say if it would vote to reject the package.
Greens leader Adam Bandt says the party will vote in support of the Albanese government's proposed energy price cap legislation.
Gas producers met Treasury officials on Tuesday to press for the removal of certain parts of the legislation,including section 53V that would hand the government powers to dictate where,when and at what price companies must supply gas in certain circumstances.
Sources familiar with the talks,who were not authorised to speak publicly,said the industry was hopeful that the clause would be scrapped before it was put to parliament. Negotiations between Treasury officials and industry over the bill were continuing on Wednesday evening.
Credit Suisse analyst Saul Kavonic criticised the “rushed” consultation period,which began only on Friday evening.
“Labor is seeking power to be able to take any business’s gas away and force them to sell it wherever,to whoever and at whatever price the government decides on the day,with no recourse,” he said.
Opposition Leader Peter Dutton has criticised the ALP over the power price deal.Nine News
“The entire process raises a warning sign against investing in any sector in Australia. If they can do this to gas,and not even allow debate on it,they can do it to anyone.”
Another controversial element of the government’s plans,a so-called “reasonable price” mechanism that would force producers to fix sales contracts based on the cost of production plus a “reasonable” profit margin after the wholesale price caps expire in 2024,remains under consultation until February.
Resources Minister Madeleine King will also hold rolling meetings with gas companies on Thursday,including Queensland’s three LNG exporters – Origin Energy-backed APLNG,Santos-backed GLNG,and Shell-backed QCLNG – on the implications of the bill as the parliament prepares to pass the legislation.
It followed a meeting between Prime Minister Anthony Albanese,King and the Australian Petroleum Production&Exploration Association on Wednesday,which King said was “constructive”.
“We’ll work with APPEA and the gas companies to address their concerns. I can’t say we can address all of them,but we’re certainly going to take their comments on board and try to make this a better solution because it will be going to parliament tomorrow,” King told Sky News.
She said moves by Shell and Woodside to suspend processes to supply new gas into Australia’s east coast were “understandable” because the government was engaging in a serious intervention in the market.
“But I’m very confident that they will meet their commitment to me and to the government. But also,it’s a commitment to the Australian people to make sure there is gas available,” King said.
United States-based ConocoPhillips,one of the world’s largest oil and gas companies,entered the political debate on Wednesday and hit out at the “heavy-handed regulation” it said was being rushed through with next-to-no consultation.
“The government has missed the mark with this policy,” ConocoPhillips Australia president Dan Clark said.
“This attack on the gas industry will actively discourage further investment to find and develop additional sources of gas at a time when Australia is crying out for affordable and reliable energy.”
ConocoPhillips,which owns a stake in the Origin Energy-backed APLNG liquefied natural gas project in Queensland,said the price-based intervention through the emergency caps and mandatory code of conduct would negatively affect Australia’s reputation as a stable,free-market economy with regulatory certainty.
“Capping the price at which a business can sell its product or service,and having only two days to allow that business to consult on it,is not genuine consultation,” he said. “This is anti-business behaviour that significantly increases the risk of investing in Australia.”
Woodside chief executive Meg O’Neill said the 12-month price caps would not work,but the company was more concerned about a long-term price control forming part of a mandatory code of conduct for gas producers that the government would seek to legislate on Thursday.
“Any price intervention is problematic because it distorts the market,and so what it does is it sends a signal to customers and to producers that there’s uncertainty,” she told ABC Radio National.
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