Treasury backs intervention in energy market to slash prices

The federal government has given the green light to temporarily intervene and bring down gas and coal prices.

The Treasury says intervention in the energy market was warranted because price increases drive by the war in Ukraine are not only having a severe impact on households, but also putting many businesses at risk.

The case for the government stepping in was outlined at the Senate estimates committee yesterday, the Australian Financial Review reports.

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"The current gas and thermal coal price increases are leading to unusually high prices and profits for some companies; prices and profits well beyond the usual bounds of investment and profit cycles," the Treasury said.

Treasury said "war-driven price shocks" strengthened the case for government intervention, rather than allowing the market to adjust to energy sector disruption.

The Albanese government is under pressure to intervene after budget forecasts predicted a 50 per cent increase in power prices over the next two years.

Treasurer Jim Chalmers will almost certainly reserve Australian gas for Australians at a capped price before the resources companies can sell it overseas for huge profits.

This will help businesses but not families – especially those living in NSW and Queensland – where power bills are often driven by coal, not gas.

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Meanwhile, one of Australia's much-loved snacks has become the latest victim of skyrocketing gas prices after a chip factory in Sydney saw its power bill triple overnight.

The Snackbrands factory in Smithfield pumps out 750 kilograms of Cheezels every hour, along with Thins, Kettle and CC's chips.

But after its gas supplier, Weston Energy, went broke, the company changed to Australian gas, which has sent the power bill from about $3 million to $9 million a year – or about $173,00 a week.

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