Joint media release with The Hon Jim Chalmers MP, Treasurer, The Hon Chris Bowen MP, Minister for Climate Change and Energy, and The Hon Madeleine King MP, Minister for Resources and Minister for Northern Australia.
The Albanese Government is today releasing for final consultation the mandatory code of conduct (Gas Code) to secure more gas at reasonable prices for Australian consumers.
Following significant consultation with gas producers and users over previous months, the Gas Code improves upon the approach to implementing reasonable pricing outlined in the December 2022 consultation paper.
The Gas Code will ensure sufficient supply of Australian gas for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure Australia remains a reliable trading partner by allowing LNG producers to meet their export commitments.
The release of the Gas Code consultation today gives stakeholders an opportunity to provide technical feedback on the draft regulations before the Code is finalised ahead of the new financial year.
It will ensure domestic prices are reasonable by establishing a price anchor, or mechanism to drag prices down, through the combination of:
- A price cap, which is to be set at $12/GJ and subject to a review commencing by 1 July 2025;
- A process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments; and
- Allowing small producers of gas to be exempt from the price cap if they supply only the domestic market.
In addition, it will require all participants to abide by conduct provisions that will level the negotiating playing field between users and producers to deliver a better functioning gas market.
The Gas Code will be supported by a strong enforcement regime delivered by the ACCC, with a review to be undertaken no later than two years after coming into effect, to ensure the Gas Code remains effective and fit for purpose.
The Government is seeking views from gas market participants on the Gas Code, including the merits of the approach to reasonable pricing relative to the original framework proposed in December 2022, as well as submissions from large gas providers on the supply and price commitments they would be prepared to make in the context of the proposed exemption framework.
In response to unprecedented power price rises as a result of Russia's illegal invasion of Ukraine and a decade of energy policy chaos under the Liberals and Nationals, the Albanese Government took immediate action to shield Australian gas users by temporarily capping the price of gas in December 2022.
Coupled with action to cap coal costs for power generators, gas price caps under the Government's Energy Price Relief Plan nearly halved wholesale energy prices.
The Gas Code will minimise the risk of supply shortfalls, deliver Australian gas at reasonable prices for Australian families and industry, and provide certainty for our valued trading partners.
It will address the shortcomings of the former Government's failed approach to gas policy, which saw persistent supply shortfalls as assessed by the ACCC and skyrocketing domestic gas prices, with average gas prices increasing by 250 percent between the 2019 and 2022 elections.
