Antitrust Alert: ACCC Highlights C&I Users' Need For More Affordable Electricity and Gas

Jones Day
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Jones Day

In a speech to the Energy Users Association of Australia ("EUAA"), the Australian Competition & Consumer Commission ("ACCC") Chairman said that the energy market is not working effectively for commercial and industrial users ("C&I users"). In particular, the gas market is of significant concern to C&I users due to the consequences for employment, investment, and company viability. The chairman noted that the gas shortfall for southern states, moratoria, and other regulatory restrictions are currently impeding the gas market and discouraging additional investment. This has led to significant increases in prices paid by gas consumers in the southern states, including C&I users. The chairman also said that overspend on network infrastructure and environmental schemes, such as premium solar feed-in tariffs, have contributed to price increases.

This follows an announcement by the ACCC that, to improve transparency, it will start publishing liquefied natural gas "netback" prices. Netback price is the cost of natural gas in the domestic market, being the export price for LNG, minus the costs incurred by the producer up to the LNG sale point (including transporting, processing, and shipping costs). The ACCC and Australian Energy Market Operator ("AEMO") have also warned that Australia may face a significant gas shortfall in the first half of 2018 if supply is not increased.

The ACCC is focused on producing a report by the middle of the year on how to improve electricity affordability for Australian businesses and consumers. The report will be part of the ACCC's three-year gas inquiry, and follows its interim reports published in December 2017 and April 2018. It will make recommendations on networks, environmental schemes, generation, and retail.

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