Stronger measures need to be taken so businesses and households are not paying more for gas than would be expected in a well-functioning market, according to Australian Competition and Consumer Commission (ACCC) chair Rod Sims.

Speaking at the Australian Domestic Gas Outlook conference this month, Sims said the gas market is not functional or competitive.

“We can see no end to the increasingly complex and difficult environment we are in, unless LNG producers and other gas suppliers, pipeline operators and governments all work together,” he said.

Sims spoke about the lack of progress on the voluntary Gas Code of Conduct, which is intended to even the playing field between gas suppliers and buyers.

“The Code provides an opportunity for industry to collectively develop a new set of rules that addresses poor selling practices and facilitates competitive outcomes,” Sims said.

“The failure by industry to present a substantially progressed voluntary Gas Code by the government’s deadline of February this year is unacceptable; stunningly gas users have yet to even see a copy of the Code.”

Export parity prices are also an important factor influencing domestic gas prices and affordability in the east coast gas market.

Sims said that despite gas prices falling significantly over the past year, the ACCC’s January 2021 report found that prices were still higher than export parity and the risk of a supply shortfall remains.  

“The long term supply outlook shows us that there is a risk of a shortfall for southern states as early as 2024, and the east coast market as a whole in 2026 and beyond,” he said.

“New sources of supply and related infrastructure will be required to avoid a potential shortfall.

“Adding to this problem is the limited degree of competition at the producer and retailer level, which results in higher prices and a reduction in competitive outcomes for commercial and industrial users.”

comments powered by Disqus