The Australian Competition and Consumer Commission’s (ACCC) Gas Inquiry 2017–20 Interim Report – April 2018 has confirmed conditions in the east coast gas market have improved since September 2017, but the market is still not functioning effectively.

Prices offered to large commercial and industrial (C&I) gas users towards the end of 2017 were well below the peak of over $20/GJ in early 2017.

After falling to a range of $8 to 12/GJ between June and November 2017, price offers made between November and January 2018 narrowed to $8 to 10/GJ for gas commodity.

Additional large C&I users contracted for 2018 gas supply, and some have begun to secure gas supply at these prices for 2019 and beyond.

Despite improved prices, the gas market continues to suffer from a lack of transparency across the supply chain.

To promote improved gas price transparency, the ACCC will begin publishing LNG netback prices on its website to provide gas users with better information about export parity prices.

The east coast gas market is exposed to international LNG prices, which influence domestic prices.

ACCC Chairman, Rod Sims, said, “At the moment gas users haven’t got enough information to assess how international prices are driving domestic gas prices.

“We believe that publishing LNG netback prices is an important step towards improving gas price transparency to improve the competitive bargaining process.”

Other measures aimed at increasing transparency are also beginning to come into effect.

The ACCC has examined the information recently published by pipeline operators under new disclosure obligations under Part 23 of the National Gas Rules.

“While it is early days, we have found that published standing prices for pipeline services are higher for many pipelines than the prices paid under existing contracts,” Mr Sims said.

“They are also higher than what we have seen in recent contracts. We do not think this was intended when these measures were put in place.

“The ACCC will continue to review the information published under the new disclosure obligations. In the meantime we believe shippers should be able to negotiate prices below the standing prices recently published.

“We will continue in our work to improve transparency across the gas supply chain.”

The ACCC’s next interim report is scheduled to be provided to the Treasurer in late July 2018.

It will report on the gas supply and demand outlook and the recent experiences of C&I users in securing gas supply, as well as continuing to update on gas prices offered and agreed in the market. 

Charlotte Pordage is Editor of Utility magazine, a position she has held since November 2018. She joined the team as an Associate Editor in October 2017, after sharpening her writing and editing skills across a range of print and digital publications. Charlotte graduated from Royal Holloway, University of London, in 2011 with joint honours in English and Latin. When she's not putting together Australia's only dedicated utility magazine, she can usually be found riding her horse or curled up with a good book.

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