The Federal Government’s Mandatory Gas Code of Conduct has now become law – coming into effect as of 11 July – and is expected to secure more reasonable gas prices for Australians.
The Gas Code is intended to ensure that Australian gas is available for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and help to ensure that Australia remains a reliable trading partner.
Producers have already offered indicative domestic supply commitments of at least 260 PJ to 2027. These indicative commitments reduce the risk of shortfalls as assessed by the ACCC and AEMO.
The final Code follows extensive consultation with gas producers and users to ensure it is fit for purpose.
When the final design was announced, it was welcomed by industry, with the Energy Users’ Association of Australia saying that it expected the Code will make it easier to contract gas in Australia at reasonable prices and with reasonable contract terms.
The Code will ensure domestic prices are reasonable by establishing a price anchor, or mechanism to drag prices down, through the combination of:
- A price cap, which is to be set at $12/GJ and subject to a review commencing by 1 July 2025
- A process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments
- Allowing small producers of gas to be exempt from the price cap if they supply only the domestic market
In addition, it requires all participants to abide by standards of conduct to level the playing field between users and producers to deliver a better functioning, more competitive gas market.
The Gas Code is supported by a strong enforcement regime through the ACCC, with a review to be undertaken no later than two years after coming into effect, to ensure the Gas Code remains effective.
To view the final code visit https://www.legislation.gov.au/Details/F2023L00994.