Parliament will be recalled next week to ensure Australian households and businesses get relief from soaring energy bills under a deal struck at national cabinet on Friday.

“We’re taking urgent action to shield Australian families from the worst impacts of these price hikes,” Prime Minister Anthony Albanese said after the virtual meeting.

“Extraordinary times call for extraordinary measures.”

The meeting with first ministers – held virtually due to Mr Albanese’s COVID-positive status – agreed to four measures.

• A 12-month cap on gas of $12 a gigajoule, to be monitored by the Australian Competition and Consumer Commission
• A temporary cap of $125 a tonne on coal prices
• Targeted bill relief for households – paid by state governments, but with $1.5 billion in Commonwealth funding. It will start in the second quarter of 2023.
• Boosting Australia’s renewable energy supplies, including via the capacity investment scheme agreed by state and territory energy ministers on Thursday.

Parliament will have to be recalled to deal with legislation for the gas cap. Mr Albanese said he had already had discussions crossbench senators, including independent David Pocock, Jacqui Lambie and the Greens.

“[They] have agreed it’s appropriate that parliament be recalled next week to make sure that this legislation can be carried,” he said.

Mr Albanese said Friday’s agreement was an example of the federal and state and territory governments working together to achieve relief on soaring bills.

“We’re taking urgent action to shield Australian families from the worst impacts of these price hikes,” he said.

“We’re working hand in hand with our state and territory partners to find the best outcomes for all Australians. Keeping Australians in work, keeping industry going, and making sure that families and businesses can pay their bills.”

The actual power bill relief will vary by state, and there will be additional support for those who receive Commonwealth payments.

Mr Albanese said the price relief scheme would be worked out by state and territory treasurers as bill reductions, rather than cash payments, as that way it would not add further to Australia’s inflation burden.

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Queensland Premier Annastacia Palaszczuk was the first state or territory leader to make a public statement on the national cabinet deal.

“We recognise that there are cost of living pressures, not just in Queensland but across the nation,” she said.

“We all want to do our part to help. That’s why we have agreed for the $125 a tonne cap on the coal prices.”

She said her government – which owns the state’s power network – had already given Queenslanders $575 in rebates in the past four years.

Earlier, the federal opposition warned national cabinet’s decisions must not have unintended, long-term consequences.

Opposition spokesman Simon Birmingham was concerned the government’s potential interventions in the market could scare away investors.

“We have to see the government’s detail … particularly when it comes to gas companies being able to drive a harder bargain without necessarily going down the path of direct regulatory intervention,” he said.

“If you’re creating investment uncertainty on top of that … the government might provide something they claim as short-term relief, but it may actually result in more long-term pain.”

The October federal budget forecast a 56 per cent increase in electricity prices and a 44 per cent rise in gas prices for households in the next two years.

Mr Albanese said he expected the caps to put downward pressure on energy prices – and that national cabinet had heard the prices had begun to fall as the federal government flagged its intention to act.

-with AAP