EUAA Submission: Mandatory Code Of Conduct
Emily Wood | May 12, 2023
‘…The EUAA welcomes the Federal Government’s decision to implement the Mandatory Gas Code. It is required because our first preference – a competitive domestic gas market – is not the case now and has not been the case for many years. This market failure has required Government intervention in the form of the Mandatory Code. Our members have had first-hand experience for many years of this market failure and the market behaviour the Code is designed to address – bargaining power imbalances, capricious behaviour by some producers and prices that have no relation to Australian market fundamentals. This suggests that gas producers have no interest in their domestic social licence.
This experience has been comprehensively documented in successive ACCC Gas Reports since 2016. We undertook lengthy good faith negotiations with gas producers to develop a Voluntary Code in 2021. We eventually withdrew from the process because we saw it achieving nothing for consumers in a market where producers could continue to exercise market power – limited good faith provisions, no effective price clause and no effective enforcement. It did nothing to further the development of a workably competitive market.
Gas producers exercise of market power reached its zenith in late 2022 when the only offer to supply some of our members received was at LNG netback when LNG netback was >$60/GJ. That gas producers were surprised that the Government acted to implement a price cap and a mandatory code is surprising to us…’
Please download document to read full submission.