Australian regulator lays out gas price cap guidelines

Australia's competition regulator has issued a set of interim compliance and enforcement guidelines for the 12-month price cap of A$12/GJ on domestic gas prices in east Australia.

The Australian government's policy to impose the price cap was part of new legislation to provide financial relief to households and businesses affected by higher energy prices.

The Australian Competition and Consumer Commission's (ACCC) main role in the implementation of the gas price cap is to enforce the regulations, act as the investigating body for suspected breach and apply penalties.

The provisions include how the ACCC will enforce the price cap when a gas deal in done. These scenarios include, but are not limited to, the determination of payable price when made in reference to other variables, when differential pricing is included to account for seasonal peaks in demand, or for when payable price may not have included transportation costs.

Its scenarios of potential avoidance schemes by producers include a producer settling for a transaction for regulated gas at A$12/GJ, then imposing an additional transportation charge. The ACCC said it could find such a producer guilty of engaging in an avoidance scheme.

Buyers and sellers in the Australian domestic gas market have been in a deadlock since the price cap was applied in mid-December, resulting in limited trading activity. Many sellers have held back from making offers, while buyers have mostly been in no rush to buy for any longer than for day-ahead or a few days ahead of delivery, limiting trading to mostly forward months, said market participants.

It is unclear if the ACCC's guidelines might motivate sellers and buyers to make new deal, participants added.

By Subethira Ahrumugam