Householders can expect energy bill rebates in the upcoming federal budget amid warnings that gas and electricity bills could spike more than 23 per cent higher this winter.
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Energy Minister Chris Bowen said Treasurer Jim Chalmers was negotiating with his state and territory counterparts over energy bill relief measures that will be unveiled in the May budget.
"The Treasurer, Dr Chalmers, is negotiating with all these state and territory colleagues," Mr Bowen said.
"The rebates that will be in the federal budget will provide further relief over and above the package of interventions that we announced last year."
The expected rebate follows federal government's move late last year to cap wholesale coal and gas prices, in a decision the Australian Energy Regulator (AER) said had prevented a 50 per cent increase in energy charges.
The AER released its draft Default Market Offer (DFO), forecasting householders in the eastern states could expect energy bills to rise by as much as 23.7 per cent from July 1.
This could affect more than 600,000 homes and 100,000 small businesses.
Mr Bowen said last year's market interventions avoided additional increases of between $268 and $530 a year.
He said if the federal government failed to intervene on wholesale prices, it would have "crippled many businesses and be a crushing blow to Australian families".
The AER default market offer is a price safety net, and sets maximum increases for households and small businesses on standard retail plans in South Australia, NSW and south-east Queensland.
NSW residential customers can expect the biggest increases at 23.7 per cent. Victoria releases its own default offer.
AER chair Clare Savage blamed the price rises on volatile conditions in wholesale energy markets in the past two years, caused by the war in Ukraine, uneven recovery from disruptions caused by the pandemic and significant outages at coal-fired power stations.
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Ms Savage said the DFO only applied to about 10 per cent of residential customers on default offers.
"So if you're in the market shopping around looking for a good energy deal, your offer will be compared to the default market," she said.
"Customers can shop around to get a better deal. Already, today in the market, you can save between seven and 17 per cent off your bill if you shop around."
The AER will publish its final decision in May.
Shadow spokesman on energy Ted O'Brien said he rejected the government's attempt to to "spin this dreadful news into a positive".
Mr O'Brien said market interventions would reduce supply and increase prices over the longer term.
"It's disgusting to see Labor patting itself on the back while telling Australians that the energy price shocks will continue to hurt, but it could have been much worse," he said.
"No Australian deserves to go cold this winter because of Labor's failing energy plan."
