Australians can expect "careful interventions" in the short-term to keep a lid on energy prices, while cheaper renewable energy is rolled out, federal Energy Minister Chris Bowen says.
Energy ministers meeting in Melbourne on Friday agreed on an amendment to the national gas law.
"This will ensure the Australian Energy Market Operator has the powers to ensure supply of gas over the coming winter and beyond," Mr Bowen said.
Due to a quirk in the structure of the market, the law change will need to first go through the South Australian parliament.
The ministers will consider, at a meeting in Gladstone next month, further rule refinements after consulting with industry.
The changes will give AEMO the ability to better identify, signal and address shortfall risks that will affect the consumer gas and electricity markets.
The Australian Energy Market Commission will conduct a review of the new framework within three years.
Mr Bowen said there was a strong commitment from all levels of government to push down the cost of energy.
The federal budget released on Tuesday projected a 56 per cent increase in retail electricity prices over the next two years.
Gas prices were forecast to rise by 40 per cent this year and a further 40 per cent in 2023.
Labor committed at the election to lower average household energy bills by $275 a year by 2025, but this is unlikely with the ongoing volatility in coal and gas markets driven by the Russian invasion of Ukraine among other factors.
"State and territory ministers agreed today together with me that we will not stand by and watch this (global impact of the Ukraine war) flow through to the Australian people without taking action," Mr Bowen said.
"We have agreed we have levers at out disposal and we intend to carefully, methodically use those levers wherever it puts downward pressure on prices."
He said the long-term solution was to roll out more renewables - the cheapest form of energy - together with transmission and storage.
Earlier, Treasurer Jim Chalmers told reporters the government was also working on reforming the code of conduct applying to pricing in the gas market, and getting advice from the Australian Competition and Consumer Commission.
"If there's more that we can responsibly and sensibly do when it comes to gas prices in particular, we will do it," he said.
"I don't want to pre-empt or unnecessarily limit or narrow our options."
Former competition watchdog boss Rod Sims has suggested the government threaten gas providers with export limits to try and lower Australian prices.
Mr Bowen pointed out a heads of agreement had already been signed with three major gas exporters to avoid a shortfall next year.
He said the government wouldn't leave consumers and businesses behind if prices escalate quickly.
In his budget reply speech on Thursday night, Opposition Leader Peter Dutton said Australia needed to have an "intelligent conversation" on the role nuclear power could play in providing affordable and reliable emissions-free energy.
"If you don't like coal, you don't like gas, hydro is probably a decade away, you've got limited options ... all I've said is we should have a discussion about the zero-emission modular nuclear reactors," he told the ABC on Friday.
"All of us are in favour of renewable energy of course, the fact is we need to firm the system up at night time."
On Friday he warned of potential dangers in setting a price cap for gas.
"Now, they're going to cap gas prices - I don't know what that means for sovereign risk," he told reporters in Canberra.
"The prime minister was in Perth only last Saturday week with the Japanese prime minister ... (they) are worried about what the supply would look like for their countries."
