Treasury wants intervention on energy prices

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Treasurer Jim Chalmers says government intervention is necessary to ensure industry does not crumble amid soaring energy prices, ABC News reports.

The Budget forecast electricity prices would increase 56% over an 18-month period, with gas prices increasing by 44%.

Related article: EUAA throws support behind gas price cap

The government has flagged some form of market intervention to avoid steep hikes in electricity and gas prices over the next 12 months, however, it’s unclear what form this will take.

“The current gas and thermal coal price increases are leading to unusually high prices and profits for some companies,” Treasury secretary Dr Stephen Kennedy said in a statement to parliament.

“Prices and profits well beyond the usual bounds of investment and profit cycles.

“The same price increases are leading to a reduction in the real incomes of many people, with the most severely affected being lower income working households.

“The energy price increases are also significantly reducing the profits of many businesses and raising questions about their viability.”

Peak body Energy Users’ Association of Australia (EUAA) has signalled its support for a gas price cap.

“Many industrial energy users who are re-contracting for gas and electricity can testify to the spike in energy prices with many seeing a 300% increase in the price of gas compared to just 12 months ago,” EUAA CEO Andrew Richards said.

Related article: National Energy Performance Strategy consultation opens

Former ACCC chair Rod Sims also said, “We need to get the east coast liquefied natural gas (LNG) producers to supply sufficient gas to the east coast at prices below $10/Gj. They would continue to make a profit at those prices, albeit much less than otherwise. As it happens, the Commonwealth has the power to get such commitments, because it has the power to stop exports. That power gives it complete leverage.”

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