The Federal government has just wrapped up its national cabinet meeting in Canberra where the prices of gas and coal have been capped with the aim to reduce electricity prices.

The government will spend $1.5 billion on payments to households and small businesses from April next year under a deal with the states to ease pressure on energy bills

New South Wales and Queensland have capped the price of coal at $125 a tonne, with the Federal government capping the price of gas for at least a year at $12 a gigajoule.

National Political Editor at Nine, Michael Pachi joined Luke Davis to explain what this means for households and small businesses.

Press PLAY to hear Michael Pachi explain 

Photo: Getty