Measures capping gas at $12 a gigajoule for 12 months started on Friday after being signed off by acting Treasurer Katy Gallagher overnight.

Federal parliament was recalled last week to pass the legislation for the temporary cap, following an agreement by Prime Minister Anthony Albanese and state and territory leaders at national cabinet.

The price cap will apply to new domestic wholesale gas contracts by producers on the east coast.

In a joint statement, Senator Gallagher and Energy Minister Chris Bowen said the cap would help to keep energy prices low following increases stemming from the war in Ukraine.

“The Albanese government’s responsible and meaningful action on gas prices is about ensuring a stable and well-functioning gasmarket for the benefit of Australian households, industry and manufacturers,” the statement said.

“The government has taken a responsible approach that will shield households, industry and manufacturers from the worst of the predicted gas price spikes and save jobs.”

The intervention in the gas market is expected to lower gas prices by 16 percentage points during the 2023/24 financial year.

The last federal budget previously forecast rises in gas prices of 20 per cent during both the current and the next financial years.

The legislation passed last week also allowed for a mandatory code of conduct for gas retailers.

The code is set to be put in place earlier next year, with submissions on how the code would operate set to close in early February.

The consumer watchdog will also be given powers to oversee and enforce the code.

A review of the code will be carried out after six months.

-AAP