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A new consultation paper from the Federal Government is proposing a raft of new measures to address high energy prices and ensure wholesale gas markets will 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,” she 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.

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1 Comment
  1. Michael Fontana 1 year ago

    The Federal Government “capping” the price of gas at a time when there is a global shortage of it will succeed in doing nothing but making gas shortages still worse. And this gas shortage will result in shortages from industries that rely on gas as an essential input. In short the Federal Governments proposed policy will seriously damage the Australian economy, and further cripple the gas industry.

    And why is there a global gas shortage? The minister for Energy, Chris Bowen, would have us believe the cause is Putin and the war in Ukraine. But this is just the proverbial straw that broke the camels back. Governments around the world have been crippling the fossil fuel industry for decades, in the hope that “renewable” energy will take its place. This policy has been a catastrophic failure (witness the energy crisis in Europe), and it is time for us to reverse course before we too fall victim to the criminalisation of fossil fuels.

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