ACCC Chairman slams gas moratoria

ACCC Chairman Rod Sims.

ACCC Chairman Rod Sims.

Australian Competition and Consumer Commission (ACCC) Chairman Rod Sims has identified gas moratoria’s in states and territories as one of the reasons behind the energy crisis.

Addressing the National Press Club in Canberra yesterday, Mr Sims said energy affordability issues are already hitting Australia’s manufacturing sector hard.

“We at the ACCC have been sounding the alarm in relation to business energy costs for some time, it is great that there is now considerable focus on the issue,” said Mr Sims.

“We have gas affordability issues for completely different reasons to those driving our electricity affordability issues.

“The gas shortage, however, is making the electricity affordability issues worse.

“Moratoria and other regulatory restrictions in New South Wales, Victoria and Tasmania are preventing or impeding onshore gas exploration and development in those states, and particularly causing higher gas prices in the south.”

Mr Sims also took aim at LNG exporters, saying companies are continuing to sell gas to the international LNG spot markets in excess of contract requirements.

“It must be acknowledged that there are some issues with getting significant quantities of this latter gas into the domestic market, however they do not seem insurmountable,” said Mr Sims.

“To make matters worse, there seems to be no attempt by the LNG producers to meet some of their contractual commitments via the low-priced international spot market so that they could divert gas to the high-priced domestic market.

“In a normal market you would expect the export and domestic markets to arrive at a similar price.

“This is not happening – international prices are at all-time lows; Australian gas prices are at all-time highs.”

Finally, Mr Sims launched a defence of the Australian Domestic Gas Security Mechanism (ADGSM), saying he understands that it isn’t ideal for the market but there aren’t many other options on the table.

“The Federal Government may be faced with a choice of pulling the trigger on the mechanism or seeing factories closed and jobs lost,” said Mr Sims.

“I am simply pointing out that those who criticise consideration of the ADGSM need to consider all the options available to the Commonwealth right now.

“There are not many, this is a bad place to be.”

You can read a full transcript of Mr Sims’ address to the National Press Club here.

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