The federal government has instructed the Australian Competition and Consumer Commission (ACCC) to monitor murky dealings in the gas market in an effort to address rising costs.
The announcement comes as households along the eastern coastline are paying
a premium for liquified natural gas (LNG) due to a shortage in the domestic market – despite Australia
being on track to become the largest exporter in the world.
The ACCC will make opaque industry dealings transparent in an effort to lower gas
prices, says Prime Minister Malcolm Turnbull.
"This new measure will shine a light on transactions with the Australian
gas market and help it operate more fairly and efficiently.
"[It] will run over three years, with regular public reporting, and will
give the ACCC and market participants a complete picture of the gas
The announcement followed a meeting intended to address the rising costs of
LNG between members of parliament, the gas industry and the Australian
Energy Market Operator.
Households are relying on LNG to hedge the use of electricity during peak
periods, such as hot summer days or in the coming cold winter months. The
Prime Minister confirmed a framework has been put in place to ensure the
delivery of gas during peak periods to prevent blackouts.
But the country's LNG supply is being exported at a rate expected to make
Australia the largest exporter by 2020.
"The Government remains concerned that the east coast export LNG operators
have not yet clearly articulated how Australian households and business
will get adequate supply at reasonable prices," says the Prime Minister.
A focus of the monitoring regime will be
placed on ensuring gas companies uphold domestic commitments, says Rod Sims, Chair of the ACCC.
"This new measure is an important element of the Government's plan to make
sure more affordable gas is available to industry and consumers.
"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," says Sims.
A report released this week by the Climate Council, titled 'Pollution and
Price: The cost of investing in gas', called on the government to invest in
future-proof renewable power.
Continuing to invest in gas will do little to drive utility prices down,
says Andrew Stock of the Climate Council
"Australians need to know that more gas doesn't mean cheaper power.
"If our government places more reliance on gas power instead of renewables
in the domestic market, all it will do is drive up electricity bills more."
The ACCC will release public reports on the state of the gas market every
six months, with the first report due in October 2017.
This is the second time in months the federal government has invoked the
ACCC to monitor the power industry. An inquiry was launched in March to
scrutinise the behaviour of electricity retailers and examine why
competition hasn't resulted in lower prices.