Government announces reforms to gas pricing

On August 6, the federal government released a major announcement on gas pricing. The body of changes hopes to bring down gas prices for domestic and industrial consumers.

Industry and manufacturers will play an important role in the plan. In a statement to Manufacturers’ Monthly, Minister for Energy and Emissions Reduction, Angus Taylor, said that, “The Government has announced that it will engage with the manufacturing sector to explore opportunities to lower gas costs and reduce demand through increased energy efficiency and electrification measures. As a part of this review the Government will consider the feasibility of establishing mechanisms to facilitate collective bargaining.

“These initiatives will be developed in consultation with relevant businesses and industry associations,” said Taylor.

The changes include a commitment to consider a gas reservation scheme. If instituted, large gas export projects will have to consider the domestic market. As part of this proposal, the federal government will push for state government to remove restrictions on gas projects.

The government will also begin its review of the Australian Domestic Gas Security Mechanism (ADGSM) this year, instead of next. When complete, the review will provide the government with advice on whether the ADGSM is fit for purpose and if it is delivering the lowest possible prices for consumers.

Finally, the government will promote greater transparency and supply in the gas market through reforms developed by the COAG Energy Council.

Other measures as part of the gas package include further supporting the ACCCs monitoring role, the electrification of gas plants to reduce gas usage in its production, and seeing whether a more liquid wholesale gas market could be established faster.

“The measures announced today recognise we need a comprehensive plan across the gas supply chain which deals with production, prices and market transparency,” said Taylor.

Taylor urged state and territory governments to remove barriers to gas exploration, such as moratoriums on coal seam gas mining.

“But State and Territory governments must do their part by freeing up supply and supporting investment through the removal of bans on gas exploration. I encourage all State and Territory governments to take this action, and to work with the Australian Government to consider a national gas reservation scheme and further COAG Energy Council action on gas market reform,” said Taylor.

Already, the Queensland government has responded to the proposed measures, arguing for input from the state government.

“The LNP Federal Government has never consulted Queensland on its domestic gas security mechanism and we remain in the dark on whatever is planned next,” said Queensland Energy Minister, Dr Anthony Lynham.