The Albanese government will receive advice on possible interventions in the energy market as early as next week, including potential price caps, bargaining provisions for smaller energy users, and a legally binding code of conduct for the gas sector.
At Senate estimates on Thursday, the Australian Competition and Consumer Commission said it was preparing advice on a range of options for a new mandatory code of conduct for the sector, along with guidance on other “regulatory gaps” in the market.
It is expected that the government will adopt a suite of reforms to address the 56% increase in electricity prices and the 44% increase in gas prices forecast over the next two years outlined in the October budget. The federal treasurer, Jim Chalmers, has said all options are on the table.
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Treasury this week gave the green light to an intervention, arguing that war-induced price shocks being felt by households and businesses required the government to step in.
The ACCC chair, Gina Cass-Gottlieb, told parliament the agency was looking at “enhancements” to the current regulatory framework that would “in legal terms provide greater transparency, certainty and binding outcomes”.
She said this included a mandatory code of conduct for the gas sector – as has been widely expected – which would include a reference to prices in contract negotiations.
The treasurer had asked the ACCC to look at whether making the voluntary code of conduct around gas purchase negotiations mandatory would assure supply and lead to reasonable pricing, she said.
The Greens senator Nick McKim asked whether the scope of the ACCC’s review had “hard boundaries” or whether the regulator could potentially look at capping retail prices.
In response, Cass-Gottlieb said that while the first part of the treasurer’s request related to wholesale prices between gas producers and their purchasers, the ACCC had also been asked to look at any other “regulatory gaps” relevant to the current circumstances facing the east coast gas market.
“So there is a possibility that the second more general one would address that [retail price caps],” she said.
Capping the wholesale price of gas or coal was also “a possible option” the ACCC would consider as part of its work, she said.
The regulator flagged new measures to help smaller purchasers of gas negotiate better deals with producers, with Cass-Gottlieb saying the agency was looking at collective bargaining to improve purchasing power “in multiple ways.”
Ahead of the likely government intervention, the Coalition has been targeting Labor over energy prices, with the opposition leader, Peter Dutton, arguing for nuclear power to be considered to help ease the pressure on prices.
Speaking on 2GB radio, Dutton said the technology for storing renewable energy was not yet available and he accused the government of being “ideologically driven” to switch off coal and gas off before being able to store renewable energy.
“In that scenario, the prices continue to go up because there’s this uncertainty in the market and the lights will go out,” Dutton said.
“You can have renewables – everyone’s in favour of that, and if the storage comes along, that’s great – but at the moment, you can’t turn off the old system until a new technology is discovered or the science changes.”
In parliament, the energy minister, Chris Bowen, ridiculed the opposition for its anti-renewable stance.
“The battery was invented by Alessandra Volta in 1800 … but the leader of the opposition is still catching up with this fact,” Bowen said.
“The leader of the opposition doesn’t get it … they don’t understand that renewable energy is the cheapest form of energy. They pay lip service to it but they just hate all the policies that actually deliver renewable energy.”