Australia has a unique opportunity to restore energy affordability, according to Australian Competition and Consumer Commission (ACCC) Chair Rod Sims.
Mr Sims was speaking via video about the opportunities in the gas and electricity markets at the 2020 National Conference of the Energy Users Association of Australia (EUAA).
“This dreadful pandemic has caused significant personal hardship and economic disruption for businesses but also provided an opportunity to reset affordability and competition in energy markets,” Mr Sims said.
“We are very concerned about the widening divergence between domestic gas price offers and the LNG netback price, or the price LNG producers receive when they sell their gas overseas.
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“This can be seen in both spot and forward, or longer-term, prices.”
Mr Sims said the sudden drop in international prices should, in a well-functioning market, be reflected in the prices offered in the domestic market.
“The Australian market is linked to world gas markets so when there are lower gas prices around the world, it is vital that Australian gas users get the benefit,” Mr Sims said.
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“The LNG producers need to explain why they are selling gas to domestic users at substantially higher prices than they can get from buyers in international markets.
“The recent dramatic reduction in wholesale electricity prices, which have fallen by around 40-50 per cent for reasons unrelated to the COVID pandemic, represents an opportunity to reduce electricity prices and restore our international competitiveness.”
The new Prohibiting Energy Market Misconduct laws will ensure electricity retailers pass on to customers sustained and substantial reductions in their costs.
“We expect those reductions in wholesale market costs to be long lasting and so to be seen in lower customer bills, and the ACCC will take action where retailers do not reduce their prices,” Mr Sims said.
“Australia is at a tipping point in terms of achieving competitively priced gas and electricity, and we need to ensure that this opportunity is not lost.”