With Australia amid an escalating energy crisis, News Section Editor Zoe van der Merwe, breaks down the new Energy Price Relief Plan. What it means for you and how it plans to lower energy costs.
On December 15, the Energy Price Relief Plan was passed in Parliament, aiming to reduce the impact of rising energy prices. Under the new Bill, announced by Prime Minister Anthony Albanese, the federal government will contribute to energy costs by placing an emergency 12-month price cap on coal and gas. The Bill is set to provide “immediate action” on the prevalent energy crisis and “future reform” for the energy industry. [1]
The four key measures of the Bill include: [2]
1. Uncontracted gas prices capped at $12 a gigajoule.
2. Coal used for electricity, capped at $125/tonne.
3. $1.5 billion in “targeted” relief on power bills for small businesses and households in need.
4. A new Capacity Investment Scheme to ensure supply reliability for future renewable energy generation and storage.
These measures are estimated to dampen expected gas prices by 2% in 2022-23 and 16% in 2023-24. As well as reduce projected electricity prices by 13% in 2023-24 and decrease expected inflation in 2023-24 by 0.5%. [3]
Assistance will be directly built into household bills, with varying systems of implementation between states and territories. The Bill will undergo revisions and funding delegations in the National Cabinet and is set to be finalised by March 2023.
Despite these positive projections, there have been prevalent voices of concern from industry groups. Australian Petroleum Production and Exploration Association (“APPEA”) Chief Executive, Samantha McCulloch, said that “this intervention in the market will have the opposite effect of that intended. Price caps and ongoing regulation of prices will undermine the case for investment in new supply and ultimately lead to higher prices and greater problems down the track.” [4]
Amid an escalating energy crisis, time will tell if these measures indeed bring relief to the Australian people.
[1] “Energy Price Relief Plan.” Prime Minister of Australia, 15 Dec 2022, https://www.pm.gov.au/media/energy-price-relief-plan-0.
[2] Ibid.
[3] Grattan, Michelle. “Power Package: $3 Billion for ‘Targeted and Temporary’ Relief on Bills.” The Conversation, 9 Dec 2022, https:// theconversation.com/power-package-3-billion-for-targeted-and-temporary-relief-on-bills-196292.
[4] Tancredi, Holly. “Energy Price Relief Bill Passes Parliament with Industry Concerns.” Energy Magazine, 20 Dec 2022, https://www. energymagazine.com.au/energy-price-relief-bill-passes-parliament-with-industry-concerns/.
[5] Ibid.