New laws will provide the Australian Energy Regulator (AER) greater powers to monitor wholesale gas markets.
AER Chair Ms Clare Savage said the laws that came into effect on 23 June will give the regulator new market monitoring functions to ensure short-term gas markets are operating competitively.
“Ensuring competition in all aspects of the energy market is vital to the availability and affordability of energy for households and businesses,” Ms Savage said.
“As with the electricity wholesale market, competition in wholesale gas markets needs to be monitored in order to detect issues to enable action when needed.
“These laws give the AER new powers to monitor information related to price and volume in the shorter-term gas market, including how gas is exported overseas and how it is traded here in Australia. In particular, we will be able to monitor the export, reserve, storage, and domestic sale and swaps of gas.
“This will provide greater transparency of gas export prices and provide insight into what value we are getting out of our gas wholesale market. This is particularly significant given recent scrutiny over gas wholesale prices, which make up about a third of household bills, and scrutiny over gas supply and its impact on market stability.”
Depending on the breach and enforcement outcome, the maximum penalty under the new laws is:
- $10 million, or three times the benefit gained from the breach, or 10 per cent of annual turnover, or
- $1,435,000 (plus $71,800 per day for continuing breaches), or
- $67,800 per infringement notice.
Ms Savage said it is more important than ever that the regulator has effective tools to monitor the market.
“We welcome recent quick action by South Australian Parliament to provide the AER new powers to monitor the wholesale gas market. These powers were agreed to by energy ministers in 2020 to bolster our capability and improve transparency in the gas market,” Ms Savage said.
“Reforms are also progressing to provide the AER more appropriate powers to monitor the wholesale gas and electricity market to further respond to current market conditions. These reforms will give us greater visibility of contracts, enable us to better assess the competitiveness of wholesale markets, and better understand ongoing market liquidity.
“The AER’s role is to monitor what’s happening in the wholesale market and the behaviour of market participants.
“The market and consumers should be confident that these powers will allow us to identify and address matters as they arise.”
A package of reforms to improve the transparency, competitiveness and long-term security of Australia’s gas supply is also underway. Under the proposed reforms, the AER will monitor and enforce new gas pipeline regulations.