Send extra gas south to dodge shortfall, ACCC says
The ACCC has warned extra gas will need to be transported from Queensland to southern states to avoid shortfalls in 2024, amid a continuing tight outlook for users on the east coast.
The competition regulator has warned extra gas will need to be transported from Queensland to Australia’s southern states to avoid winter shortfalls for 2024, amid a continuing tight outlook for users on the east coast.
The Australian Competition and Consumer Commission’s latest gas inquiry report forecasts balanced supply and demand next year if Queensland’s LNG producers export all their currently uncontracted gas, or a 71 petajoule surplus if they only export their currently anticipated spot sales. This is down from the 90 PJ surplus forecast in the June report.
The ACCC says while overall the supply of gas in 2024 is forecast to be sufficient across the east coast, LNG producers will need to commit small amounts of additional gas to the domestic market to avoid a shortfall in winter.
Gas will also need to be transported from Queensland to the southern states of NSW, the ACT, Victoria, South Australia and Tasmania to avert local winter shortfalls.
“The LNG producers still have a substantial amount of uncontracted gas, which they have the option to either export, after meeting their heads of agreement obligations, or supply domestically,” said ACCC commissioner Anna Brakey.
“Contracting activity between gas producers and users has generally picked up this year after a stagnant period late last year and in early 2023, but as of August this year large volumes of gas remained to be contracted for 2024.”
According to the report, the overall east coast gas market is expected to have enough supply to meet demand until 2028, but forecasts indicate the southern states will face significant shortages of locally produced gas from 2027.
Meanwhile, the ACCC has called for cheaper electricity plans, saying consumers are paying more than they should be for power.
The ACCC said many households were on more expensive plans than they needed to be and prices for existing customers had to stay more competitive.
Ms Brakey said electricity retailers offered cheaper plans to attract new customers but over time these became relatively more expensive.
“Many loyal customers will be paying more than they need to be,” said Ms Brakey.
The call for cheaper power prices comes as the ACCC reports the supply of gas in major markets would be sufficient next year.
The ACCC’s latest electricity market inquiry report showed the estimated cost for residential customers on market or flat rate offers had increased by significantly more than default offers.
“Almost half of all households on flat rate market offers were paying equal to or more than the default offer, which was intended to be a reference price and safety net to protect disengaged consumers from unreasonably high prices,” Ms Brakey said.
The ACCC analysis also showed customers on legacy market offers with large conditional discounts, such as pay-on-time discounts, were still paying close to the default offer even when they achieved the discount. Customers who do not achieve the discounts risk paying significantly more than the default offer.
In August, the ACCC found 79 per cent of residential customers were paying estimated prices equal to or higher than the median offer available on major comparison websites. This indicates many households could save money by changing their electricity plan.
“We strongly encourage consumers to use the government energy price comparison sites to find a cheaper deal, but we’re also recommending that policy makers identify and address the barriers that are preventing many people from changing electricity plans and accessing cheaper market offers,” Ms Brakey said.