Energy bill passed - what does it mean for the consumers

The bill to cap energy prices passed today in the federal parliament. But how long would the consumers wait until they get some relief?

Getty

The bill provides for a cap on the price of coal and gas.

A cap is imposed on the price of natural gas at $12 per gigajul and $125 per tonne on the price of coal (wholesale price). The price of gas now stands at $41 per gigajul; the ceiling will be valid for 12 months, and as Finance Minister Jim Chalmers said today in parliament, it will be reviewed in mid-2023.

When will consumers see reduced bills

According to estimates, consumers will see the benefits of these measures in the June quarter of 2023.

However, it is expected that the government intervention would put pressure on production companies to lower their prices.

Clare Savage, head of energy regulator Australian Energy Regulator, said, speaking at the National Council meeting last Friday, that the mere fact that the government is discussing the issue of intervention in the energy sector has led to a declining pressure” on wholesale energy prices.

Discounts for the vulnerable

There will be relief for vulnerable groups in the form of a discount on energy bills. Groups such as pensioners, unemployed and low-income families.

There will be no financial aid in the sense of a sum given to consumers, Mr Chalmers said.

This aid to vulnerable consumers will be co-financed by the federal government and the states and territories.

The government hopes that households will save about $230 a year on energy bills. And this amount is calculated based on the reduction in price increases. More specifically: in the fiscal year 2023 -24 estimates indicated that the price of electricity would increase 36%. Now, after government intervention, the increase is expected to stand at 23%. The price of natural gas instead of an increase of 20% this year, 2022 and by the same percentage next year, 2023, is now expected to increase by 18% and 4% respectively.

Energy prices this year (2022) increased by 20 to 30% and according to estimates were expected to increase by an additional 56% in the next two years. The government by capping the wholesale price of natural gas and coal is putting a lead on the upward pressure on energy prices.

Related content