Thursday, 27 April 2017 Sydney
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ACCC to investigate and report on Australian gas markets and market transparency::

The Australian Competition and Consumer Commission will use its inquiry powers, including its ability to compulsorily acquire information, to increase transparency and address opaqueness in the gas market. The ACCC will provide regular information to the market over the next three years on the supply and pricing of gas under a broad reference from the Federal Government.

“This new measure is an important element of the Government’s plan to make sure more affordable gas is available to industry and consumers,” ACCC Chairman Rod Sims said.

“The inquiry will examine how gas suppliers will make more gas available to Australian industry and other domestic gas users, and the effect this has on overall market dynamics. Improved transparency will provide a clear overview of the entire market and help ensure it is operating efficiently and that competition is benefiting all gas users.”

“We will be seeking to identify the use of market power and other obstructions to the efficient supply of gas, as well as publicly reporting on market information when it is needed. Equally as important, we will identify longer term measures that can address these issues,” Mr Sims said.

“Importantly, the inquiry will help verify progress in changes in domestic gas supply and monitor commitments made by gas suppliers to the Government to make more gas available and also ensure gas is delivered at times of peak electricity demand.”

The ACCC will also work with Dr Mike Vertigan to recommend longer term measures to increase transparency, facilitate competition, and support the gas market.  This work will cover the full supply chain, including producers, transporters and retailers.

In undertaking this work, the ACCC will liaise with energy agencies such as the Australian Energy Regulator, the Australian Energy Market Commission and the Australian Energy Market Operator.

The ACCC will release public reports on the state of the gas market every six months, in addition to the more regular information. The first report is due to be released in October 2017.

The ACCC is also currently undertaking a dairy inquiry and retail electricity pricing inquiry. In 2015, the ACCC undertook the east coast gas inquiry at the direction of Government. The ACCC has recently completed a market study into cattle and beef markets, and studies into the new car retailing industry and the communications sector are underway.

More information, and the Terms of Reference, are available here: Gas market transparency measures

Background

In 2015, the ACCC undertook an inquiry into the east coast gas market. The Inquiry found that unprecedented changes in the east coast gas market since 2012 can be attributed to three key factors:

  • the magnitude of gas flows to the liquefied natural gas (LNG) projects in Queensland, which are removing gas from the domestic market
  • lower oil prices, which are resulting in declining investment in gas exploration and lower production forecasts for both domestic and LNG projects, and
  • moratoria and regulatory restrictions, which are affecting onshore gas exploration and development.

The ACCC cautioned that the east coast gas supply outlook in the medium term was uncertain and emphasised that there was an urgent need for new gas supply from diverse sources to support the domestic market. The ACCC also made a number of recommendations around improving arrangements for gas transportation and gas market operations and transparency.

The Australian Energy Market Operator’s 2017 Gas Statement of Opportunities projected that declines in gas production will lead to insufficient gas between 2019 and 2024 to meet both domestic gas and electricity forecast demand. AEMO and industry have developed a framework to make sure gas is delivered at times of peak electricity demand to prevent blackouts, to be in place by 1 October 2017. The gas industry has also revised supply and production figures which, subject to further study by AEMO, should help address projected shortfalls.