The Australian Government has now released the mandatory code of conduct (Gas Code) for final consultation to ensure additional gas at reasonable prices for Australian consumers.
The Gas Code builds on the strategy to adopt appropriate pricing indicated in the December 2022 consultation paper, following extensive consultation with gas producers and consumers over the preceding months.
According to the Federal Government, the Gas Code will secure an adequate supply of Australian gas at fair rates for Australian customers, provide producers with the assurance they require to invest in supply, and ensure Australia stays a stable trading partner by allowing LNG producers to meet their export commitments.
The publication of the Gas Code consultation today allows stakeholders to submit technical feedback on the draft provisions before the Code is completed ahead of the next fiscal year.
It will assure fair domestic pricing by establishing a price anchor, or mechanism to push prices down, using a combination of:
- a price cap of $12/GJ, subject to a review beginning on 1 July 2025;
- a process for qualifying for exemptions from the price ceiling based on satisfying ACCC and court-enforceable supply guarantees; and
- Allowing small gas producers to be free from the price ceiling if they exclusively supply the domestic market
Furthermore, all parties will be required to follow conduct provisions that will level the bargaining playing field between users and producers in order to offer a better-functioning gas market.
The Gas Code will be supported by a strong enforcement system supplied by the ACCC, with a review to ensure the Gas Code remains effective and fit for purpose no later than two years after it goes into effect.
The Federal Government is looking for opinions on the Gas Code from those who are involved in the gas market, as well as feedback on the approach to reasonable pricing and how it compares to the original framework that was put forth in December 2022. The Government is also interested in hearing from large gas suppliers about the supply and price commitments that they would be willing to make in the context of the proposed exemption framework.
The Albanese Government claimed it acted swiftly to protect Australian gas users by temporarily capping the price of gas in December 2022 in response to unprecedented power price increases brought on by Russia’s illegal invasion of Ukraine and a decade of energy policy chaos under the Liberals and Nationals.
According to the Federal Government, gas price caps under the Energy Price Relief Plan, together with steps to cap coal costs for power producers, virtually cut wholesale energy prices in half.
The Government added that the Gas Code will reduce the risk of supply disruptions, deliver Australian gas at fair rates to Australian households and businesses, and give assurance to our valued trade partners.
The draft Gas Code consultation begins today and will close on 12 May.
