static image

Gas Users United in Support for ACCC Findings

Peak bodies representing Australian industrial gas users are united in their support of the findings of the ACCC's January 2021 Interim Report on the Eastern Australian gas market. Those findings underline the concerns of industrial gas users about the severe headwinds the current gas market presents to existing jobs, jobs growth and Australia's overall economic health.

This is the 10th ACCC report in a row to find that gas users are paying prices for gas that are above export parity. And it is also the first to show evidence that export parity is seen as a floor price by at least some suppliers – as long suspected by energy users.

We welcome the ACCC's reports, which are relied on by gas users for transparency in a complex and opaque gas market. The increased scope of the reports in the past year has provided greater insight into prices and what shapes them than ever before.

The fall in spot gas prices in Eastern Australia last year is proving brief, with local prices marching back up and netback prices surging to extraordinary, though hopefully temporary, levels in January.

The ACCC's observation that competitive dynamics have only been a limited constraint on gas prices in recent years is concerning and highlights the limited benefits for gas users of the current approach to the market.

A future mismatch between supply and demand is a serious risk that will require action across supply, demand, markets and policy to avoid and manage. One essential part of this is the ACCC's review of the basis for netback pricing. The ACCC's current netback methodology only excludes recovery of short-term export-related costs, and domestic gas users fear this leaves them exposed to the longer-term costs of LNG export infrastructure they don’t use or benefit from.

Our own immediate focus is the joint work of our organisations on behalf of gas users to negotiate with gas suppliers on a Code of Conduct that we all hope will make a positive contribution and improve outcomes for domestic gas users.

Innes Willox
Chief Executive, Ai Group

Samantha Read
Chief Executive Officer, Chemistry Australia

Andrew Richards
Chief Executive Officer, Energy Users' Association of Australia

Ben Eade
Chief Executive Officer, Manufacturing Australia

Media contacts:

Ai Group: Tony Melville (0419 190 347)
CA: Shayna Welsh (0488 660 443)
EUAA: Emily Wood (0421 042 121)
MA: Ben Eade (0406 641 881)