Australian Pipelines and Gas Association (APGA) Chief Executive Cheryl Cartwright said that the Energy Ministers – who met in Canberra last week for the COAG Energy Council – have indicated they are either unwilling or unable to grapple with the real issues of Australia’s gas markets.
The COAG Energy Council has agreed to significant reforms to ensure the energy systems remains affordable and reliable, but the industry has some concerns over the proposed changes.
Meeting in Canberra last Friday, the Energy Council will focus on a major new program of work as Australia’s energy landscape transitions to a lower emissions future.
The Council focused on three key areas of reform:
- Increasing liquidity and transparency in gas markets;
- Empowering consumer choice; and,
- Ensuring stability and connectivity of the National Electricity Market (NEM).
Significant reports on gas market reform from the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Commission (AEMC) provided a strong evidence base and momentum for action.
To fast track implementation of the recommendations from these reports the Council will form a new Gas Market Reform Group headed by Dr Michael Vertigan.
Minister for the Environment and Energy Josh Frydenberg said these are the most significant reforms to the domestic gas market in two decades.
“The Council recognised the growing importance of gas as a transition fuel as we move to incorporate more renewables into the system,” said Mr Frydenberg.
“The reforms will improve competition, encourage more supply and put downward pressure on prices.”
However, Ms Cartwright said the decision to prioritise pipeline regulation above all other aspects of the gas market is very disappointing.
“The meeting communique noted that a key issue for gas market reform would be to increase the overall supply and the number of suppliers, but more pipeline regulation will do nothing to deliver those increases,” said Ms Cartwright.
“The pipeline industry accepts sensible change such as proposals from the AEMC to introduce new gas markets, capacity auctions and trading platforms to improve the operation of the gas market.
“By choosing to prioritise consideration of the ACCC’s recommendation on pipeline regulation, there is a very real risk of delaying the widely accepted AEMC proposals.
“The continued fascination with pipeline reform is inexplicable when transmission costs make up such a small proportion of a user’s gas bill – less than 5 per cent for households and less than 10 per cent for large users like manufacturers.
“Six years ago, the wholesale price of gas was $3 and transport costs were $1. Now the wholesale price of gas is more than $6 and transport prices are still $1.”
Ms Cartwright welcomed the appointment of Dr Michael Vertigan to lead the Gas Market Reform Group which will consider the AEMC and ACCC proposals.
“We trust Dr Vertigan’s extensive experience, including in the energy industry, will be a great benefit to this new group,” said Ms Cartwright.
“We have great faith that Dr Vertigan will not blindly accept the ACCC’s analysis and recommendations, and will be able to focus on reforms that deliver liquidity and competition over regulation.”