The Australian Competition and Consumer Commission (ACCC) report makes a number of recommendations to alleviate gas market issues, particularly for industrial users.
Some of the key recommendations include:
- Enabling new gas supply to come to the market, in particular in south eastern Australia;
- Revisiting the regulatory coverage of pipelines, increasing the ability of pipelines with market power to be regulated; and,
- The consistency and transparency of the provision of information to the market.
The ACCC Chairman Rod Sims signalled out the pipeline sector for particular need for regulation and reform.
“While the pipeline sector is responding to a changing market dynamics and offering new services, pricing based on significant pipeline market power is prevalent. The regime regulating gas pipelines is not fit for purpose and pipeline pricing is largely unconstrained by either the threat of regulation or effective competition,”? said Mr Sims.
“Pipeline pricing exacerbates the effect of supply tightness on wholesale gas prices. There are currently very few constraints on monopoly pricing by pipeline operators.”?
Meanwhile, the Australian Petroleum Production and Exploration Association Chief Executive Dr Malcolm Roberts agrees with the report’s findings that there is an urgent need for policy and regulatory changes.
“The report highlights that the greatest risk to the market is regulatory failure, not market failure,”? said Dr Roberts.
“The ACCC confirms that removing unnecessary government restrictions on exploration and development is the most effective way to boost supply, enhance competition and put downward pressure on prices.
“The industry welcomes the Commission’s findings and trusts that the public debate can now move on from discredited arguments to the real issues, in particular, we are looking to the COAG Energy Council to make regulatory reform an urgent priority.
“Governments must remove regulatory barriers to bring more suppliers into the market.”?