East Coast Gas Inquiry final report

On 22 April 2016, the Australian Competition and Consumer Commission (ACCC) released its final report following its inquiry into the competitiveness of the wholesale gas industry.

The links set out below contain more information on various aspects of the Inquiry:

• Gas supply - ACCC recommends increasing sources of supply and improving transparency
• Gas transportation - ACCC recommends new coverage test focussed on market power

While the report is wide ranging, the ACCC focussed primarily on issues impacting gas supply and gas transportation. The ACCC noted that gas producers and pipeline operators have been operating in an industry undergoing substantial change in recent years.

Gas supply

The ACCC found that the main issue affecting supply in the east coast gas market was uncertainty regarding the future supply outlook and a lack of transparency and information regarding reserves, resources and prices.

In order to combat these issues, the ACCC made a number of recommendations designed to increase supply, increase transparency regarding reserves and prices, and allow for monitoring of separate gas specifications. The ACCC also indicated that it will reconsider the joint marketing activities of the Gippsland Basin Joint Venture (GBJV).

• Read more about how ACCC recommends increasing sources of supply and improving transparency

Gas transportation

The ACCC found that pipeline operators have responded in a ‘dynamic’ way to changing market conditions.

However, the ACCC expressed concerns about evidence of monopoly pricing on some pipelines. In response, the ACCC suggested that a new approach to regulating gas pipelines is needed to overcome what it perceives as a failure of the current regulatory regime to prevent the use of market power in the supply of transportation services. In particular, the ACCC has recommended a new market power based test for coverage, which, if implemented, would represent a substantial departure from the trend towards lighter regulation of gas pipelines in recent years.

The ACCC also flagged concerns about the potential withholding of capacity on regional pipelines and indicated that it will further investigate this behaviour.

• The full report can be found here.
• Read more about how ACCC recommends new coverage test focussed on market power

Next steps

If the ACCC’s recommendations are accepted, a number of different organisations will be tasked with carrying out those recommendations. As well as the tasks detailed in the table below, the ACCC has:

• encouraged State and Territory governments to remove blanket moratoria on onshore CSG and manage risks of individual gas supply projects on a case by case basis, and
• requested that AEMO develop and publish monthly LNG netback prices to Wallumbilla.