Gas prices on Australia’s east coast have fallen in recent months but greater transparency is still needed to improve the bargaining power of big users, a new report from the competition watchdog says.
The Australian Competition and Consumer Commission says it will soon begin publishing “netback” prices for liquified natural gas (LNG) to give local commercial gas users more information about the effect of international pricing.
The netback price, to be published on the ACCC website in the coming months, will remove the cost of transportation costs for overseas shipping to give local users a clearer understanding of the cost of the energy component of gas pricing.
ACCC chairman Rod Sims said with the east coast gas market exposed to international LNG prices, the new measure will help reduce the “information imbalance” between commercial and industrial users and their gas suppliers.
The aim is to ultimately help to improve the competitive bargaining process, Mr Sims said.
The ACCC also identified, contrary to new disclosure obligations for pipeline operators, that gas pipeline operators were publishing standing prices for pipeline services that were higher than the prices paid under existing and recent contracts.
While the ACCC will now review the disclosure rules, Mr Sims said shippers should be able to negotiate prices below the recently published standing prices.
The ACCC’s interim report on its 2017 gas market inquiry has found that, after peaking 12 months ago at around $20 per gigajoule (GJ), 2018 east coast prices for gas – minus transport and additional retail costs – fell to around $8 to $12/GJ between July and November 2017.
The watchdog found prices then fell again, to around $8 to $10/GJ between November 2017 and January 2018, possibly due an agreement reached in September, 2017, between major Queensland gas exporters and the federal government to increase supply to the local market.