Households and businesses will get no immediate relief on their utility bills after Friday’s meeting of energy ministers, with discussions instead aimed at ensuring electricity and gas supplies will be ample next winter.
Federal, state and territory energy ministers gathered in Melbourne for an update on power and gas markets, and to discuss progress on creating some form of a capacity market that would bolster the reliance of the energy sector as coal-fired plants exit.
One measure agreed was an amendment of the national gas law to give the Australian Energy Market Operator the powers to “ensure supply of gas over the coming winter and beyond”, the federal energy minister, Chris Bowen, said at the meeting’s end.
“The crisis around energy markets right around the world is of course having an impact on Australia,” Bowen said, with Russia’s invasion of Ukraine triggering a jump in global coal and gas prices which are feeding into domestic energy costs.
“We all have levers at our disposal and we intend to carefully and methodically use these levers … wherever they put downward pressure on prices,” he said. “The cheapest form of energy is renewable energy and the faster we get transmission built, the faster we get renewable energy built, the faster we get new storage built, the better our country will be.”
According to the communique of the meeting, governments would “consider all options to take strong action as a matter of urgency”, without specifying new steps.
Interest in the ministers’ gathering was heightened after the federal budget, which was released on Tuesday, warned that electricity prices would rise on average about 20% this fiscal year and 30% next year. Gas prices, already up 20% in 2022-23 would rise a similar amount in 2023-24, the treasurer, Jim Chalmers, said.
The impact on rising energy bills also showed up in the spike in consumer prices, with gas prices alone jumping more than 10.9% in the September quarter. Without state rebates in Western Australia and elsewhere, power bills would have jumped 15.6%, the ABS said.
Lily D’Ambrosio, Victoria’s energy minister, said that unlike under the Morrison government, states and federal ministers were working as one. “Added together, they make for a mighty, mighty effort, and real growth in terms of our ambition,” she said.
D’Ambrosio, though, said that while gas production costs in Australia had not changed, prices had doubled. Industry groups have said contract prices have tripled in the past 18 months.
“This can only mean gas producers are making obscene profits at the expense of every household, at the expense of every business, at the expense of every manufacturer,” she said. “It’s not a supply issue, it’s an absolute profiteering issue.”
Discussion on solutions had been “fruitful”, D’Ambrosio said, without providing details.
One person familiar with Friday’s discussions said the next energy ministers’ meeting, planned for Gladstone in Queensland in December, “is the place where everything would come together”.
Between now and then, ministers would be briefed by officials on the shape of a possible capacity market that would support electricity supplies when generation from wind and solar sources was low. Such a market, though, would “not serve as a backdoor to prop up coal”, the person told Guardian Australia.
Ministers, including Bowen, were keen not to exclude options that might be useful later on, while identifying that measures without careful research would only foster expectations that might not be delivered on, this person said.
Bill Johnston, WA’s energy minister, said his state’s households were facing an increase in their power prices of just 2.5% this year, with a $400 rebate actually making the bills shrink.
The state’s reservation of 15% of gas supply for domestic use, in place since 2006, meant WA had “probably the lowest gas prices in the world”. A capacity market for electricity also meant prices were more stable, Johnston told Guardian Australia.
Adding a reservation policy for gas in the eastern states now, though, would be difficult since the LNG export infrastructure had already been built, he said.