Threaten Australian gas companies with export limits to rein in domestic prices, former ACCC boss says

Former competition watchdog boss Rod Sims says the Albanese government could solve the energy price crisis by threatening gas companies with limits on how much they could export, arguing it would prompt the industry to lower prices for Australian consumers and businesses.

Gas-fired electricity is the most expensive form of power generation and the major factor in the wholesale price passed on to consumers.

Senior ministers are working with the ACCC, the Australian Energy Regulator and departmental officials on options for regulatory intervention in both the gas and electricity markets.

The government on Wednesday asked the ACCC to review a voluntary code of conduct covering the gas industry and to recommend options to toughen it. Gas industry representatives believe Labor is considering making the code mandatory and extending the powers of the Australian Energy Market Operator to govern market behaviour.

The energy and climate program director with the Grattan Institute, Tony Wood, said the government had two realistic options to disconnect domestic and international gas prices.

The sharp rise in electricity prices was underlined in an Aemo report on Thursday. It showed wholesale electricity spot prices across the eastern states in the September quarter were more than triple those of a year earlier. They averaged $216 a megawatt-hour.

But they were down 19% from the record $264/MWh paid in the June quarter when scheduled and unexpected outages at coal plants triggered the suspension of the electricity market.

Gas is underpinning recent high prices. Average prices for fuel on the east coast were $26 a gigajoule, down about 9% on the June quarter but still 142% more than the September quarter of 2021.

Renewables continued to set fresh records including supplying 64.1% of generation on 18 September.

Looking ahead, Aemo found wholesale electricity prices in the eastern mainland states next year were now expected to be 20% higher than forecast in the June report.

The price of contracts for supply in 2023 averaged $202/MWh, up from $168/MWh three months earlier. NSW was the most expensive, averaging $232/MWh, and Victoria the cheapest at $157/MWh.

Aemo said the market was expecting wholesale energy costs to be higher next winter than over summer because of the scheduled closure in April of three remaining units at the Liddell coal-fired power station in the Hunter.

Labor said before the election that its modelling showed its policies would cut electricity bills by $275 by 2025. The Coalition has said the increase in prices was evidence of a broken promise.