Anthony Albanese and his cabinet are set to endorse a multi-pronged strategy to curb sky-high power prices, as pressure mounts on the government to urgently intervene in the market.
The ABC can reveal the government will likely cap wholesale gas prices at about $12 a gigajoule, demand a guaranteed domestic gas supply from producers, and enforce a mandatory code of conduct as part of a market intervention first flagged five weeks ago.
The details — described as "fluid" by one insider — could be unveiled as early as next week when the prime minister holds national cabinet, and Energy Minister Chris Bowen is set to meet his state counterparts.
Subsidies are also under consideration but are likely to be sector-specific to avoid worsening inflation.
"We do have to consider everything … because it is so complex," Resources Minister Madeleine King told the ABC.
"And to be fair, some things that at one stage we might have thought not possible, maybe we need to rethink these."
Influential union the AWU wants gas prices capped at $8-$10 per gigajoule — reflecting the five-year average spot price — but the ABC understands Labor is leaning towards a figure of about $12 per gigajoule.
But the government is yet to settle on a solution to tackle coal prices which have also spiked off the back of the war in Ukraine.
Ms King said price capping was "but one option", and on the question of a figure, she said: "We have analysis being done on this right now."
"The AWU makes a good point; these are historic prices," she told the ABC.
"Gas and coal are going up way too fast for our economy to withstand if they remain unchecked.
"There are a lot of very smart people, very thoughtful people looking at the level of the price."
Ms King warned "unintended consequences abound" with any market intervention and the government was conscious that if gas prices were capped too low, it could divert investment away from renewables.
The budget underscored the need for market intervention, forecasting power prices would rise by 56 per cent over the next two years, and gas prices by 40 per cent, largely because of the global price shock caused by Russia's invasion of Ukraine.
Unions calling for quicker action
AWU secretary Dan Walton expressed frustration with the time it was taking the government to form its response, saying the urgency of the intervention "cannot be overstated" as manufacturers locked in gas contracts with retailers.
"We've seen them nodding and saying they agree, yet we don't see a solution," he said.
"If we don't get a solution wrapped up by Christmas we are going to see many, many, many good quality workers out of a job"
Gas companies have been profiting heavily from the high prices, at the expense of businesses and households.
Origin Energy told its shareholders in August its "break-even" price was about $3.50 a gigajoule but the ABC is aware of the company offering a New South Wales steelmaker $35 a gigajoule for a 12-month contract.
Industry Minister Ed Husic — who has been a vocal critic of gas companies — said his gripe was that "they'll propose nothing and oppose everything".
"Does it really take us as a country to publicly cajole and browbeat them on the way in which they have priced an Australian resource for access by Australian businesses and households? Respectfully, I'd say no," he told the National Press Club.
"We still want them to be profitable.
"We still want them to make a return on their investment and what's been shown is that they can do it."
In Question Time, Mr Bowen said the price of gas was about $11.56 a gigajoule before the war in Ukraine, and had nearly doubled to $20.47 a gigajoule.
