{"id":193945,"date":"2023-09-21T08:19:04","date_gmt":"2023-09-21T08:19:04","guid":{"rendered":"https:\/\/tokenstalk.info\/?p=193945"},"modified":"2023-09-21T08:19:04","modified_gmt":"2023-09-21T08:19:04","slug":"big-gas-producers-accused-of-predatory-pricing","status":"publish","type":"post","link":"https:\/\/tokenstalk.info\/economy\/big-gas-producers-accused-of-predatory-pricing\/","title":{"rendered":"Big gas producers accused of predatory pricing"},"content":{"rendered":"

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Large commercial energy users have accused Australia\u2019s major gas producers of predatory pricing, telling a parliamentary hearing that a mandatory code of conduct is vital to protect households and businesses from gas producers\u2019 unfair market power.<\/p>\n

Andrew Richards, the chief executive of Energy Users Association of Australia, which represents manufacturers of everything from toilet paper to steel, told a Senate hearing into a new mandatory code of conduct for the gas industry that large energy users are still paying excessively high gas prices and have little or no bargaining power to negotiate better deals.<\/p>\n

<\/p>\n

The mandatory gas code extends a $12-a-gigajoule cap on domestic gas sales until 2025.<\/span>Credit: <\/span>Bloomberg<\/cite><\/p>\n

\u201cEven the largest gas users often find themselves at a severe disadvantage that has meant they have no choice but to pay more than $30 a gigajoule for gas when they used to pay $5,\u201d Richards said.<\/p>\n

\u201cSome of the behaviour of the gas industry can only be described as predatory,\u201d he said.<\/p>\n

Following months of friction earlier this year between the Albanese government and gas producers over proposals aimed at curbing soaring energy prices, a mandatory code of conduct governing the sector came into effect in mid-July. The competition watchdog began enforcing the code this month.<\/p>\n

The code extends a $12-a-gigajoule cap on domestic gas sales until 2025 but exempts smaller producers who sell all their gas domestically rather than export it overseas as liquefied natural gas (LNG). It also includes conditional exemptions allowing big gas producers to give stalled projects the green light as long as they contribute enough gas to supply the domestic market.<\/p>\n

Treasurer Jim Chalmers has said the code will deliver gas supply in coming years at reasonable prices for Australian industry, electricity generators and other users, and will keep the lights on and manufacturing running. The federal opposition has criticised the code on the grounds it will hamper the efforts of gas producers to bring on new supply.<\/p>\n

However, energy users told a Senate hearing into the code\u2019s effectiveness on Thursday that it should be extended to include gas retailers and not just cover gas producers selling into the wholesale market.<\/p>\n

Janine Waller from the Australian Dairy Products Association said high gas prices were hurting the farmers and milk producers who were still \u201ctotally exposed\u201d because the code didn\u2019t cover retailers. \u201cFor us, early signals really indicate that not much has changed,\u201d Weller told senators at the hearing.<\/p>\n

The uncertainty surrounding the gas industry has contributed to some east-coast producers questioning the viability of new gas supply projects, with Cooper Energy\u2019s offshore Otway Basin project, known as OP3D, and Senex\u2019s $1 billion Atlas project in Queensland still on hold.<\/p>\n

Samantha McCulloch, chief executive of gas industry body Australian Energy Producers, said the government\u2019s unprecedented interventions in the gas market had led to significant uncertainty and resulted in a number of projects being stalled, chilling plans for new investment.<\/p>\n

She said while the mandatory code was far from perfect in the short term, it did give \u201csome level of regulatory certainty to the markets\u201d.<\/p>\n

\u201cGas is also fuelling around 40 per cent of our manufacturing sector today,\u201d she said. \u201cWhat we can\u2019t afford is another prolonged period of uncertainty where no one understands the rules of the game in terms of the east-coast gas market.\u201d<\/p>\n

Gas producers want the government to prioritise bringing on new gas supply as a matter of urgency and to put a sunset clause, alongside the existing review process, in the code of conduct that will end intervention when a competitive market is fully established, she said.<\/p>\n

The head of the Australian Competition and Consumer Commission, Gina Cass-Gottlieb, said the watchdog had initiated an inquiry into whether gas retailers should be included in the code.<\/p>\n

\u201cWe have found there have been good levels of compliance with the order [temporary price caps],\u201d Cass-Gottlieb said.<\/p>\n

Prices quoted by gas suppliers have fallen from last year\u2019s highs of $65 a gigajoule and the difference is flowing through to retailers, the watchdog maintains, with the 30-day average wholesale price now around $10.47 a gigajoule.<\/p>\n

\u201cWhile we are seeing lowering of price internationally … we still see the possibility for volatility and unpredictability. It still remains a situation that the level of price needs careful monitoring and observation,\u201d she said.<\/p>\n

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