EUAA Submission: Gas Industry Mandatory Code of Conduct
Emily Wood | February 7, 2023
‘….The EUAA strongly supports the Federal Government’s proposed mandatory code of conduct (the Code) for the east coast gas industry. ACCC reports have repeatedly shown over the last six years that the east coast gas market has failed to provide a competitive outcome for consumers with producers being able to exercise market power. Our members recent experiences in sourcing gas has reinforced our view that the Code is an essential addition to the suite of Government policies along with the Australian Domestic Gas Security Mechanism (ADGSM), Heads of Agreement and ACCC market monitoring and public reports.
Ideally there would be a more diverse group of competitors in the domestic gas market and there would not be constraints on the development of new fields leading to sufficient supply to support a workably competitive market that does not require the Code. However, these issues are not going to disappear hence neither will the exercise of producer market power. Commentators who criticise the use of a price cap or reasonable price measures seem to have little understanding of how dysfunctional the east coast gas market has become and why such measures are now required.
Nevertheless, Government intervention with a ‘reasonable price’ has the potential to distort supply and price outcomes if not implemented carefully and that helps neither producer nor consumer. We want producers to develop new fields to provide competitively priced gas to our members and that this does not adversely impact on our international supply obligations. We support the Government’s approach with the Code because it will limit the potential for distortion and provide overall net benefits to the economy. Continuation of the current situation is untenable because it will lead to considerable dislocation in manufacturing industries which will have significant flow-on impacts on employment and consumer prices. …’
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