The Federal Government has released a new consultation paper, proposing a range of measures to tackle high energy prices and ensure wholesale gas markets deliver sufficient supply.
A mandatory code of conduct is proposed to address systemic issues within the wholesale gas market and guide participants’ behaviour. As part of the code, a reasonable pricing framework will provide a basis for producers and buyers to negotiate domestic wholesale gas contracts at ‘reasonable prices’, which should reflect the cost of domestic gas production, including a reasonable return.
A temporary, emergency price cap is also proposed to ensure industry remains viable, and to limit the impact of global energy pressures on households and businesses.
In response to details of the full package, Australian Petroleum Production and Exploration Association (APPEA) Chief Executive, Samantha McCulloch, has written to Anthony Albanese requesting a meeting with him, senior ministers and APPEA board members.
Ms McCulloch said the interventions would have a devastating impact on investment, reduce new supply and push up household and business gas prices.
“The oil and gas industry welcomes relief from energy prices through the proposed energy rebates, but a price cap combined with the emergence of other damaging measures will ultimately push up prices because they will undermine investment confidence and reduce new supply,” Ms McCulloch said.
“The powers provided through the Bill are extraordinary, providing for the Government to control the entirety of the market and intervene in an essentially unlimited way.”
The government intends to introduce primary legislation this year to put in place a strong enforcement framework for the mandatory code and price cap.
Consultation on the draft Bill closes on 13 December 2022.
Consultation on the price cap will close on 15 December 2022, reflecting the urgent and temporary nature of this intervention. Subject to the outcomes of the consultation, it will be implemented promptly via regulation before the end of the year.
Consultation on the mandatory code, including the reasonable pricing provision, will remain open until 7 February 2023, and it will be implemented via regulation in early 2023.