The energy industry has warned Australia is running out of power and prices are likely to rise further, as Malcolm Turnbull pledged to meet with gas company chiefs to tackle the crisis.
There could be widespread power shortages in NSW and South Australia from next year, followed by Victoria in 2021 and Queensland from 2030, the regulator has warned.
To deal with the problem, the Australian Energy Market Operator has suggested the gas and electricity markets be covered by one national policy, with the agreement of all levels of government.
"If we do nothing, we're going to see shortfalls in gas, we're going to see shortfalls in electricity," AEMO chief operating officer Mike Cleary said on Thursday.
"If we use the gas for electricity, the potential for shortfalls are in the domestic and the industrial (supplies). If we use it in industrial and domestic, the shortfalls will be in electricity."
Mr Turnbull told a business forum in Sydney he would be calling chief executives of the east coast gas companies together to explain how they plan to address what he described as a "threat to their customers".
Federal Energy Minister Josh Frydenberg said greater supply was the answer, which lay in the hands of state governments.
"This report is another reminder why the states and territories, who are locking up gas with moratoria, bans and regulatory restrictions, need to urgently rethink their position," he said.
A key reason for the tight gas market is that Australia exports two-thirds of what the country produces.
Quarantining new exploration for domestic use was a "creative" suggestion from the Queensland government and worthy of further consideration, Mr Frydenberg said.
The Australian Workers Union, which wrote to Mr Turnbull last week urging an energy crisis meeting, said a portion of gas production needed to be reserved for Australian households and industry.
"Australia's abundant natural gas is our birthright. Yet we're sending it all offshore," AWU national secretary Daniel Walton said.
Meanwhile an inquiry into the electricity system has been told prices are set to remain high while there is uncertainty over the rules and while there is no plan for what happens after old coal-fired power stations are closed.
"We are running out of power," the Australian Energy Council warned in its submission to the Finkel review.
It recommends states wind back their own renewable energy targets, as part of a return to a national policy.
However, a major study released on Thursday found that renewables were now Australia's cheapest energy option, even when the cost of storage to make the intermittent power sources reliable was added.
And "clean coal" using carbon capture and storage technology won't be commercially viable until 2030 at the earliest, meaning it won't help Australia meet its Paris Agreement emissions reduction obligations, energy market analyst RepuTex says.
But a clear, longer-term market signal was needed to let investors decide where to put their money over the next few decades.
The Lock the Gate Alliance, which has been successful in lobbying against unconventional gas development in agricultural areas, said instead of meeting with gas chiefs Mr Turnbull should be bringing together the renewable energy industry.
