Improvements in the 2020 gas supply outlook have not delivered better prices, a new report shows.
The Australian Competition and Consumer Commission is also concerned about the “uncertain” medium and long-term outlook for the east coast gas market.
In its latest gas inquiry report, the ACCC says there have been “no material improvements” in prices for commercial and industrial users this year.
“Prices offered in the east coast gas market have remained relatively steady, mostly within a range of around $9-12/GJ,” the report released on Tuesday said.
“However, domestic price offers have not fallen in line with the decline in LNG netback (export parity) price expectations for 2020.”
The watchdog has also picked up on Queensland producers including a “fixed price component”, on top of an LNG spot price linked component.
“The divergence of domestic offers from expected LNG prices is a key concern for the ACCC and we will investigate this further in 2020,” it said.
Southern states risk facing a gas shortfall in the medium-term unless there is more exploration and development, greater investment to allow more gas from Queensland or the Northern Territory to flow south, and one or more LNG import terminals developed.
Despite the problems, the ACCC said the east coast gas supply outlook has improved slightly since the last report in July 2019 and it was now less likely there would be a shortfall in 2020.
Energy Minister Angus Taylor said there was good news in the report for households, but noted the ACCC had found gas retailers had the ability to absorb potential cost increases by reducing their “considerable margins” rather than passing on costs to consumers.
“I strongly urge the same benefits to be passed on to manufacturing and industrial users, who may not be receiving a fair deal in long-term contract negotiations with gas suppliers,” he said.
Mr Taylor also announced the government would seek to extend its gas supply guarantee to help ensure electricity generators have enough fuel during periods of peak demand.
The guarantee is due to expire in March.