Federal Energy Minister Chris Bowen says all options have to be on the table to rein in rocketing power bills “as a matter of urgency” as a meeting of state and territory ministers ended without concrete plans.

Energy ministers at the meeting in Melbourne on Friday agreed the federal government would develop national policy options for the states to consider in the coming weeks through the Australian Competition and Consumer Commission.

Federal Energy Minister Chris Bowen: “Everything has to be on the table.”Credit:Jeremy Piper

“Everything has to be on the table. We have committed to consider all options on stronger action, on stronger regulation as a matter of urgency,” Bowen said.

A ban on energy supply from Russia, the world’s largest exporter, following Vladimir Putin’s invasion of Ukraine in February has driven a global energy crunch, pushing local prices skyward.

While Bowen says all options will be considered, federal Treasurer Jim Chalmers has ruled out imposing a tax on the billions in windfall profits made by gas producers since the clampdown on Russia as well as direct subsidies to bill payers, warning this would drive up inflation.

However, Chalmers said on Friday governments “will have to do more” to help lower prices confronting businesses and households in the east coast energy network, pointing to potential tougher regulations on gas companies.

“If there’s more that we can responsibly and sensibly do when it comes to gas prices in particular, we will do it,” he said.

Victorian Energy, Environment and Climate Action Minister Lily D’Ambrosio stopped short of calling for a windfall tax but slammed the “obscene profits” being made by gas companies.

“We’re seeing people being held effectively to ransom in terms of their bills,” D’Ambrosio said. “This can only mean that gas producers are making obscene profits at the expense of every household, at the expense of every business, at the expense of every manufacturer.”

The global scramble for energy is intensifying as Europe heads into winter. It has pushed retail power prices in Australia up more than 20 per cent this year and Tuesday’s federal budget forecast a further 30 per cent spike in electricity prices and 20 per cent jump in gas prices next financial year.

Heavy energy users such as manufacturers are calling for the government to put a cap on the price of gas, which is a key input for processing as well as power bills.

Only a relatively small amount of gas is burnt for electricity compared to coal – less than 7 per cent and more than 60 per cent of the energy mix, respectively. But gas is switched on at times of highest demand to swiftly fill gaps in the electricity grid, which means it drives the marginal cost of generating electricity. That means if gas is expensive, electricity bills go up.

Electricity prices are regulated under so-called “default market offers” – price caps on retail charges in the east-coast electricity grid. They are issued once a year, in May, and Bowen said the last round of offers factored in a 20 per cent price rise, which meant governments were now developing ways to stop more rises in the 2023 round.

“In the meantime, we’re not waiting for it to flow through. We are contemplating the actions we need to take today because we recognise that even then, it will take some time to have an impact.”

The official communique from the ministers’ meeting said the global energy crunch made commitments from all state and federal governments to hasten the switch to clean energy “even more important” because it would reduce reliance on imported fuel.

“A transition to renewable energy not only reduces emissions but also increases our resilience and protects consumers from such global price shocks,” it said.

Federal Industry Minister Ed Husic on Thursday echoed D’Ambrosio’s comments, warning gas companies they must be “completely deaf to public concern” if they did not see a need for lower prices.

“I’m telling them … that we are contemplating a range of interventions to ensure that we get much more reasonable pricing,” Husic said.

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