Call to cap diesel rebate, sting oil firms

Hitting producers with higher fossil fuel taxes and scrapping the diesel fuel rebate enjoyed by mining and agriculture could free up revenue for Australians stung by rising power prices.

That's the call from independent think tank Climate Energy Finance as fossil fuel producers benefit from surging oil, gas and coal profits.

"No other industry has caused such significant economic hardship for 21 million Australians, all the while banking unprecedented profits," energy analyst Tim Buckley said on Tuesday.

Calls are growing for federal and state governments to cap surging electricity and gas prices to protect Australians from further bill shock, with the question of who would pay compensation to power generators still unanswered.

Treasury has projected tariffs will rise by 56 per cent for electricity and 44 per cent for gas by 2024 without government intervention. 

The Clean Energy Council has released a six-point plan as energy ministers prepare to meet in Gladstone, Queensland, for crucial talks.

Rather than subsidies to power plants to help with their rising fuel costs, the renewable energy industry's peak body is calling on governments to fast-track new solar, wind and batteries to replace costly coal and gas generation.

"Ultimately, it's about bringing more low-cost, renewable energy online to replace unreliable and expensive coal and gas," council CEO Kane Thornton said.

Renters in particular are dangerously exposed to bill shock, according to new research by energy advisory firm Renew.

"The cost to renters of heating is set to shoot up by $200 to $500 a year, and up to $900 a year if you are using a gas heater in Hobart," spokesman Rob McLeod said.

Installing insulation and efficient heating is critical to reducing bills and if landlords won't do that voluntarily, then governments need to step in and make them do it, he said.

Both electricity and gas tariffs are set to rise – but it's homes that use gas that face the biggest bill increases.

"Our findings show that households using gas for heating, cooking and hot water could face bill increases of up to $1900 over the next two years," he said. 

All-electric homes with solar can already cut about three-quarters off energy bills, but rising tariffs mean the gap between all-electric and gas is going to grow even more.

"By 2024 a household in Melbourne will save more than $2700 a year by switching from gas to all-electric," Mr McLeod said.

"Government action is needed urgently to prevent Europe-style bill spikes – and part of that action should be getting homes off gas."

Mr Buckley said he expects the federal government to introduce a temporary domestic price cap of $8-12 per petajoule for East Coast gas and put in place measures to ensure gas companies don't restrict supply.

He said capping the diesel fuel rebate for industry could free up $4-5 billion a year in federal government revenue to help households.

Higher NSW coal royalties, following Queensland's lead, and an overhaul of the national Petroleum Resources Rent Tax that was meant to deliver a fair dividend on sovereign resources would also benefit Australians, he said.