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An Albanese government plan to reduce power bills will pass the parliament after the government struck a deal with the Greens.

Parliament will be recalled on Thursday for MPs to debate the measures to cap gas at $12 a gigajoule, introduce a mandatory code of conduct for the gas market and roll out power bill support for welfare recipients.

It is expected electricity bills will still rise by 23 per cent, but not as much as the previously anticipated 36 per cent.

Labor has a majority of votes in the lower house but needs the support of the Greens plus one crossbencher to get the bill through the Senate.

In exchange for support from the Greens, the government has agreed to a package in next year's federal budget that would allow for households and businesses to switch from gas to electricity.

It is expected to be targeted at low-income households, renters and those in public housing.

Energy Minister Chris Bowen said the price caps would take the sting out of rising energy costs.

"These price rises were not brought about by the actions of Australian people or industry, they were brought about by Vladimir Putin and Australia being ill-prepared for such a crisis," he said in Canberra.

"These are unprecedented and difficult times and this is decisive action. It's our job to act in the national interest."

Greens leader Adam Bandt said electrification would help to cut energy bills.

"The Greens are helping rein in gas corporations and help put more money in people's pockets," he said.

"It is a good day for people, a good day for bringing down power bills and a bad day to be a greedy gas corporation."

The Greens have indicated while they will support the government's price cap plans, they are still calling for a two-year freeze on electricity bill prices, and will still oppose compensation measures for coal companies.

Coal price caps of $125 a tonne will be negotiated with Queensland and NSW, putting further downward pressure on power prices.

A mandatory gas market code would regulate the supply and purchase of gas, which Mr Bowen said would ensure "reasonable pricing".

"If you want to argue for the right to price unreasonably, I think that's a courageous argument to mount," he said.

ACT Independent senator David Pocock said he would support the government's legislation in the upper house, but the measures needed to go further.

"I have made it clear to the government that this bill while, importantly, will provide some relief to households and small businesses, doesn't go far enough," he said in Canberra.

"While I will be supporting this package, I want to see a lot more in the way of electrification."

However, Opposition Leader Peter Dutton has labelled the return of parliament to debate energy relief measures as a stunt.

Mr Dutton said the coalition would support financial relief measures for energy bills but indicated efforts by the government to legislate the price caps were designed to cause political division.

"The prime minister is looking for a political wedge because we've been clear about our support of the money going to families who are suffering under this government with increased energy costs, particularly electricity and gas," he said in Brisbane on Wednesday.

"Australians are not stupid. They see through these stunts. We want to see support for families and reduction in energy prices."

The coalition has written to Treasurer Jim Chalmers calling for the government to provide the opposition with the legislation before Thursday.

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Opposition Leader Peter Dutton has labelled the return of parliament to debate energy relief measures as just a stunt.

Federal parliament will be recalled on Thursday to debate plans to cap gas for 12 months at $12 a gigajoule, roll out bill relief for welfare recipients and place a temporary cap on coal of $125 a tonne.

The proposed laws would also set up mandatory "gas market codes" to regulate the supply and purchase of gas.

Mr Dutton said the coalition would support financial relief measures for energy bills but indicated efforts by the government to legislate the price caps were designed to cause political division.

"The prime minister is looking for a political wedge because we've been clear about our support of the money going to families who are suffering under this government with increased energy costs, particularly electricity and gas," he told reporters in Brisbane on Wednesday.

"Australians are not stupid. They see through these stunts. We want to see support for families and reduction in energy prices."

The government's energy plan will need the votes of either the coalition or the Greens plus one crossbencher to get the new laws through the Senate.

ACT independent senator David Pocock said he would support the government's legislation in the upper house, but the measures needed to go further.

"I have made it clear to the government that this bill while, importantly, will provide some relief to households and small businesses, doesn't go far enough," he told reporters in Canberra.

"While I will be supporting this package, I want to see a lot more in the way of electrification."

Senator Pocock called for a transition authority to be established so households and businesses can move away from fossil fuels.

Greens leader Adam Bandt will push for a two-year freeze on power bills and support for businesses and households to replace gas appliances.

Mr Bandt said this could be funded by a windfall tax on coal and gas corporations.

"We want to see more money in people's pockets paid for by making the big coal and gas corporations pay their fair share of tax," he told reporters on Tuesday.

"We want to have some further discussions with the government about the level of support that's going to be provided to people because we're worried that people are going to wind up doing it tough."

Mr Bandt admitted negotiating did not mean everyone got what they wanted but he was hopeful his talks with the prime minister would result in positive changes to the proposal.

The opposition leader said efforts to have caps on prices would exacerbate issues in the energy market.

"We've been very clear in relation to the price cap that we don't support that because it's going to be the Australian consumers, both households and small businesses, who will end up paying higher electricity prices," he said.

"(Energy Minister Chris Bowen) should be sitting down and doing a deal so that we can get downward pressure on energy prices."

While parliament is looking at short-term solutions to the energy crisis, Resources Minister Madeleine King said a national gas reserve could also be considered as a longer-term option.

"Given the extraordinary state of the market at the moment, we have to look at all options," she told ABC Radio on Wednesday.

"It's certainly something we can look into. It is complicated to retrofit a reservation policy after we've had an LNG export industry in place for a number of years but that doesn't mean it's impossible."

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A national gas reserve could be on the table as a solution to deal with future supply issues, as the government looks to lock in its energy relief measures.

Federal parliament will be recalled on Thursday to debate plans to cap gas for 12 months at $12 a gigajoule, roll out bill relief for welfare recipients and place a temporary cap on coal of $125 a tonne.

The proposed laws would also set up mandatory "gas market codes" to regulate the supply and purchase of gas.

But while parliament is looking at short-term solutions to the energy crisis, Resources Minister Madeleine King said a national gas reserve could also be considered as a longer-term option.

"Given the extraordinary state of the market at the moment, we have to look at all options," she told ABC Radio on Wednesday.

"It's certainly something we can look into. It is complicated to retrofit a reservation policy after we've had an LNG export industry in place for a number of years but that doesn't mean it's impossible."

Ms King is set to meet with LNG operators on Thursday to discuss a gas supply deal that would help prevent shortfalls on the east coast.

However, companies involved in the deal, including Shell, have said they would suspend involvement in the agreement in the wake of the government's energy plan.

The minister said she wasn't concerned by the decision from Shell.

"It's not a halt," she said.

"They've been very clear. They're just bringing it to a temporary stop while they understand what we're proposing to implement and I think that's reasonable."

Woodside chief executive Meg O'Neill said the government's price caps would not work and would exacerbate issues with the system.

"The market is working and the government's interfering is actually causing significant disruption and significant uncertainty on both sides of the table," she told ABC Radio on Wednesday.

"It's very disappointing for us to see the government ... without consultation, propose this very significant market intervention that will have long-lasting implications.

"Any price intervention is problematic because it distorts the market and so what it does is it sends a signal to customers and to producers that there's uncertainty."

The government's energy plan will need the votes of either the coalition or the Greens plus one crossbencher to get the new laws through the Senate.

Greens leader Adam Bandt will push for a two-year freeze on power bills and support for businesses and households to replace gas appliances.

Mr Bandt said this could be funded by a windfall tax on coal and gas corporations.

"We want to see more money in people's pockets paid for by making the big coal and gas corporations pay their fair share of tax," he told reporters on Tuesday.

"We want to have some further discussions with the government about the level of support that's going to be provided to people because we're worried that people are going to wind up doing it tough."

Mr Bandt admitted negotiating did not mean everyone got what they wanted but he was hopeful his talks with the prime minister would result in positive changes to the proposal.

Shadow cabinet will meet on Wednesday but it's expected the coalition will vote against the bill.

Nationals leader David Littleproud said the government needed to address supply issues.

"I am as supportive of renewables as anyone else but the reckless speed that they are going at it meant they are putting pressure on the energy market and costs because they are not addressing supply on our firming sources, which is gas," he told ABC TV.

© AAP 2022