Opposition finance spokeswoman Jane Hume said the government should abandon its price cap and backed industry warnings of potential gas shortages and called for new policies to encourage investment in new utility projects.
“Price fixing, like a price cap, essentially leads to investment bottlenecks and supply bottlenecks, which drive up prices in the medium and long term,” Hume said.
The intervention followed a global market crisis triggered by an embargo on Russian fossil fuels that sent energy prices skyrocketing. Australia’s Treasury Department forecast in its October budget that Australian gas prices will rise 40 per cent by 2024, pushing household and business bills to potentially prohibitive levels.
ACCC chief executive Gina Cass-Gottlieb said that after the guidance is released, gas producers must start offering wholesale gas contracts at the new price of $12 per gigajoule and honor their existing commitment, which guarantees to meet domestic demand before starting new supplies export .
“That’s a reasonable expectation. We look forward to it coming into force and we will try to use our enforcement powers if we don’t see that coming into effect.”
Cass-Gottlieb said there were too many variables in the market to indicate when the benefits of price caps should flow through retail sales, but cautioned that the ACCC will monitor offers to verify whether the benefits of price caps are going to smaller businesses would be passed on.
The $12 per gigajoule price cap applies only to non-contracted wholesale gas, but excludes retail sales. That means smaller companies that aren’t buying in bulk to capture the wholesale market rely on gas retailers to pass on their savings in the form of cheaper deals.
“We expect it will take some time for that to flow through in this way,” said Cass-Gottlieb.
The Australian Petroleum Production and Exploration Association welcomed the ACCC’s guidance, noting that the watchdog has provided preliminary guidance with future updates pending.
“We want to ensure the supply of our customers. But with potential fines of up to $50 million, we also want to make sure we comply with these rules, which today’s release shows are still being defined by the government,” McCulloch said.
She expressed concern about the government’s plan to introduce a mandatory code of conduct to force producers to sell wholesale gas to Australian companies on “reasonable terms” and warned that uncertainty about future regulations would stifle investment in new projects.
The Australian Energy Council, whose membership includes gas retailers, said it will “take time” for new price caps to penetrate retail prices.
“Currently, a complication is that manufacturers seem to be trying to understand the full implications of the new federal laws so they don’t inadvertently violate them and potentially face severe penalties,” McNamara said. “This has led to a difficult period where new contract gas has become scarce.”
The government struck a “heads of agreement” deal in September with producers – including Origin Energy-backed APLNG, Shell’s QCLNG joint venture and Santos’ GLNG – who pledged to supply the domestic market over the next 12 months to offer petajoules of new gas supplies.
Cass-Gottlieb said the ACCC will continuously monitor gas producers’ behavior to allow the government to enforce the principles of the agreement, particularly ahead of seasonal peak demand for gas in winter.
“If gas wasn’t offered for a firm contractual supply, they wouldn’t be honoring the key points of the agreement,” Cass-Gottlieb said.
Because the heads of the agreement were made on the premise that the 157 petajoules of additional domestic gas would be sold at market prices, rather than capped prices, the deal’s future was cast in doubt.
When the price caps were announced in December, Shell immediately suspended its process of accepting expressions of interest for the 50 petajoules of gas it had offered under the deal, claiming it was uncertain whether it was in breach of the government’s new rules would.
https://www.smh.com.au/politics/federal/pump-cheap-gas-now-or-cop-50-million-fines-accc-tells-producers-20230117-p5cd3i.html?ref=rss&utm_medium=rss&utm_source=rss_politics_federal ACCC tells gas giants they face $50 million in fines if they don’t offer cheap gas now