The federal government has announced plans to extend the gas price cap through to mid-2025 to shield households and businesses from a jump in charges when the temporary cap expires.
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Under the government's plan the temporary $12 per gigajoule price cap will be extended through to July 1, 2025, with exemptions for small domestic-only suppliers and gas producers making "satisfactory ACCC [Australian Competition and Consumer Commission] and court enforceable supply commitments".
The government said producers will also be required to abide by a mandatory code of conduct (the Gas Code) aimed at levelling the negotiating playing field between gas users and producers.
"The Gas Code will ensure sufficient supply of Australian gas for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure Australia remains a reliable trading partner," the government said in a statement.
It said the code would be supported by a strong enforcement regime conducted by the ACCC, and would be reviewed no later than two years after coming into effect.
It has launched consultations with the broader community about the code after gaining the views of industry.
Energy Minister Chris Bowen told ABC radio the government wanted to establish a mandatory code of conduct "to ensure that this situation didn't revert to normal".
"This is all about cutting the link between very volatile international gas prices and the prices that businesses and households pay for Australian gas," Mr Bowen said.
He said the government had already had significant consultations with gas producers and industrial users and "now it's time to broaden that consultation out to a wider group".
The minister said that as part of its plan the government was seeking to increase the supply of gas into the domestic market, particularly in years of projected shortfall such as 2027.
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Critics of the gas price cap and code of conduct, particularly the fossil fuel industry, have raised concerns that the government's approach could discourage investment.
The government has also, alternatively, been attacked for leaving open the possibility of more gas mining projects.
Mr Bowen said that although renewables were on track to supply more than 80 per cent of the nation's energy, there remained a need for gas, particularly for some industrial processes.
Consultations on the draft Gas Code will close for submissions on May 12.
Adrian Rollins
Adrian Rollins is economics correspondent for the Canberra Times
Adrian Rollins is economics correspondent for the Canberra Times
