Australia power bills set to rise 23 per cent in 2023 while gas shortages loom

“There is forecast to be a 16 per cent reduction in production capacity this winter compared to 2022 in Victoria, which increases supply pressure in the southern regions,” AEMO chief executive Daniel Westerman said.


AEMO’s report raises the prospect that Queensland’s three exporters of liquefied natural gas (LNG) could be forced to hold back more supplies for the domestic market instead of offering shipments for sale overseas.

LNG producers have told regulators they expect to export 88 of the 146 petajoules of gas they still have available for sale in 2023 to the international market. However, AEMO said if they export that much it could create a domestic shortfall of up to 33 petajoules, a significant proportion of the east coast’s typical annual gas demand of 550 petajoules.

To minimise shortfall risks, AEMO said options included bringing on new gas fields and building infrastructure such as gas storage, pipelines and specialised shipping terminals capable of importing LNG from other parts of Australia or overseas.

Conservation groups insist projection of shortfalls later this decade leaves ample time for governments to develop a strategy focused on reducing gas demand, such as switching appliances from gas to electric and prohibiting new residential gas connections, rather than lifting supply.

State and federal governments are investing in a range of initiatives to cut household use of gas, encouraging people to switch from gas-fired heaters and stoves.

However, AEMO said the increased usage of electrical appliances would nearly double the demand for gas-fired electricity generation by 2042.

A spokesperson for Climate Change and Energy Minister Chris Bowen said gas will be needed to provide backup power for renewable energy, which is providing increasing amounts of electricity to the grid.

They said the government had made a number of moves to ensure sufficient local gas supply, including reforms to deals with gas exporters forcing them to ensure there were no shortfalls in the domestic market.

Social services groups on Wednesday said the looming price hikes would be devastating for low-income Australians and worsen the cost-of-living crisis.

Australian Council of Social Services called on the federal government to update the regulator’s guidelines to lower retail margins, lift JobSeeker payments to at least $76 a day and provide an emergency energy relief payment of up to $2000 for customers in hardship.

Opposition climate change and energy spokesman Ted O’Brien said the rise in power bills showed the government was failing on its election commitment to lower prices by $275 by 2025.

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