Energy Price Caps That Didn't Actually Cap Your Bill
By Direct Democracy
When the Albanese government introduced its Energy Price Relief Plan in late 2022, it was framed as urgent, decisive action to shield Australian families from a global energy crisis. The centrepiece was a temporary price cap on wholesale gas and coal, alongside $1.5 billion in direct bill rebates for households and small businesses.
Sounds good, right? So why are Australian power bills still among the highest in the developed world - and why do millions of households feel absolutely no relief?
The answer reveals something important about how policy gets made when ordinary voters aren't in the room.
What the Policy Actually Did
The Energy Price Relief Plan had two main components:
- A temporary cap on wholesale gas prices at $12 per gigajoule (down from spot prices that had spiked above $30)
- A coal price cap of $125 per tonne for electricity generators
- One-off rebates of up to $500 for eligible households and $650 for small businesses, delivered through state governments
The wholesale caps were meant to flow through to lower retail prices. The rebates were a short-term buffer while that happened.
The problem? Wholesale prices and retail bills are not the same thing - and the government knew that.
The Gap Between Wholesale and Your Bill
Retail electricity prices in Australia are set through a combination of wholesale energy costs, network charges (poles and wires), environmental levies, and retailer margins. Wholesale energy typically makes up only 30–40% of your final bill.
Capping wholesale prices was always going to have a limited effect on what you actually pay. And the evidence bears this out:
| Year | Average Annual Household Electricity Bill (Sydney) |
|---|---|
| 2020 | ~$1,400 |
| 2022 | ~$1,700 |
| 2023 | ~$2,100 |
| 2024 | ~$2,500+ |
The Australian Energy Regulator's default market offer - the benchmark retail price - rose by up to 25% in some states in 2023, even while the wholesale caps were in place. In Queensland and South Australia, increases exceeded 20%.
The one-off rebates, meanwhile, were absorbed almost instantly. A $500 credit against a $2,500 annual bill is a 20% discount for one year - it doesn't address the structural reasons bills keep climbing.
Why Did This Happen?
Here's where it gets politically uncomfortable.
The gas industry - dominated by a small number of large exporters including Santos, Woodside, and Shell - had enormous influence over how the caps were designed. The $12/GJ cap came with so many carve-outs for existing long-term contracts that the majority of domestic gas supply was simply exempted. The Australian Competition and Consumer Commission noted at the time that the cap applied to a relatively thin slice of the spot market.
More bluntly: the policy was designed not to significantly hurt the people it was supposedly capping.
The Morrison government, it should be said, was no better. It spent years promising an east coast gas reservation policy - ensuring more domestic supply at lower prices - and never delivered it. Both major parties have accepted hundreds of thousands of dollars in political donations from energy and resources companies. According to the AEC's donation disclosures, the fossil fuel sector donated over $4 million to the major parties in the 2021–22 financial year alone.
This is not a conspiracy. It's a structural problem: the people writing energy policy are deeply connected to the people who profit from high energy prices.
Who Gets Hurt
High energy bills are not a uniform burden. They fall hardest on:
- Low-income households spending a disproportionate share of income on power
- Renters who can't invest in solar panels or insulation to reduce consumption
- Regional Australians on networks with less competition and higher distribution costs
- Small businesses facing input cost increases they can't always pass on
Australia has some of the richest gas and coal reserves on the planet. We export enormous quantities of liquefied natural gas to Asia at competitive prices. Yet Australian households pay retail electricity prices that consistently rank in the top ten most expensive globally according to international energy agency comparisons. The absurdity of this situation is genuinely hard to overstate.
Why Does a Bad Policy Persist?
Because the people who benefit from the status quo are organised, funded, and have direct access to decision-makers. The people who are harmed - every Australian household - are diffuse, busy, and represented only at election time, when energy policy competes with dozens of other issues for attention.
Politicians can announce a price cap, collect the positive headlines, and move on - knowing that by the time bills keep rising, voters will have forgotten the original promise, or will blame the retailer, or will feel too exhausted to hold anyone accountable.
This is exactly the environment in which bad policy thrives.
What Would Voters Actually Choose?
Poll after poll shows Australians want affordable, reliable energy and faster investment in renewables. A 2023 Australia Institute survey found over 75% of respondents supported stronger government intervention to bring down power prices - including measures like a domestic gas reservation policy, stronger retail price regulation, and windfall taxes on energy company profits.
Those are policies that a government responding to genuine public will would be pursuing. Instead, we get rebates that expire and caps that don't cap.
In a direct democracy model, members don't just vote for a party every three years and hope for the best. They vote directly on policy - and their elected representatives are bound to follow those instructions. An energy policy put to Direct Democracy members would be judged on one question: does this actually lower household bills? Not: does this satisfy our donors? Not: does this give us a good news cycle?
The difference matters. On something as fundamental as the cost of keeping the lights on, Australians deserve a say that goes beyond the ballot box.
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