The Australian Government has released 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.
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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 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.
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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.
The consultation will close for submissions on May 12. Visit the consultation page here.
