Coal-fired power plant owners in NSW and Queensland are expected to reap up to $2 billion in rebates from state and federal governments, following the setting of price caps on fossil fuels to tame soaring energy prices.
The rebates will go to plant owners when they have to pay more than the $125-a-tonne cap for coal from mines whose cost of production means they are unable to sell below that price, a Senate inquiry into the cost of living heard on Friday.
Coal plant owners are expected to receive up to $2 billion in rebates under the Albanese government’s price cap plan. Credit:Getty
The federal government imposed the wholesale coal price cap, along with a limit of $12 a gigajoule on wholesale gas, to rein in energy prices being driven up by global energy shortages spurred by the war in Ukraine.
Federal Treasury and Energy Department officials revealed the expected cost of the rebates as they told the inquiry it was estimated the coal and gas price caps would deliver a total saving of $4.7 billion by July 2024 to retail electricity customers across the east coast electricity grid.
Liberal senator Jane Hume, who is chairing the inquiry, asked officials if the government’s election promise to cut power bills by $275 by 2025 was still possible given forecast electricity price spikes. The officials said that was a question for political representatives.
Treasury officials told the inquiry that since the price caps were imposed, forward estimates of electricity generation costs had come down and power price increases nationally were expected to be 13 percentage points lower in 2023-24, at 23 per cent, than had been flagged in the October budget.
The government has claimed household electricity bills will be about $230 cheaper on average in 2023-24 than they would have been without the price caps.
Treasury had previously forecast that retail electricity prices would increase 20 per cent by July this year and a further 36 per cent by July 2024. Household gas prices were forecast to rise 40 per cent by mid-2024.
On top of the wholesale coal and gas price caps, the federal government has pledged $1.5 billion for direct power bill relief for household customers, conditional on matching contributions from state and territory governments over and above their regular rebate schemes.
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