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Warning power prices could double as energy crisis continues

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There are fresh warnings that electricity could rise by 50 per cent over the next two years and gas prices could double.

After warnings of power shortages on the east coast and South Australia this week, things are set to get worse, experts say.

Because even as the threat of blackouts eases, industry analysts say international competition for coal and gas will keep generation costs high, and that will hurt consumers.

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"We are currently in the frying pan and if we are lucky we will emerge into the slow cooker over the next couple of months," Tennant Reed of the Australian Industry Group warned.

"Over the next two years it's likely that households will be paying 50 per cent more for their electricity and potentially double for their gas."

The wholesale price of electricity makes up about one third of a retail bill.

Last year the average wholesale electricity price on the east coast sat below $50 a megawatt hour.

By the beginning of 2022 it had risen $87 a megawatt hour.

When over seven days in June it breached a $1300 threshold – $1359 a megawatt hour – the market operator capped it at $300, and then shut the market down.

But the regulated price, $300, still has to be paid.

And the futures markets are already setting the prices for next year.

"We are now looking at futures prices for electricity of 150 a megawatt hour or more in NSW and Queensland and close to that in the other states," Reed said.

"The price of gas used to be $3 or $4 a gigajoule," he said

"Now we are looking at $30 to $40 a gigajoule."

That sounds the death knell for some energy intensive businesses.

"Companies will start collapsing," Lindsay Partridge from the nation's biggest building supplier Brickworks said.

The federal government blames its predecessor for failing to move faster on renewable energy and still claims it can cut electricity prices for average households by $275 in this term of government.

Employment Minister Tony Burke said they stand by their modelling that was there to get cheaper energy onto the grid.

To fully compensate the most vulnerable consumers from electricity price hikes would come at a huge cost, of up to $6 billion over the next three years, money no government has.



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