The BCA welcomes the opportunity to respond to the proposed mandatory gas code of conduct to guide behaviour in the market.
The BCA acknowledges the need to address current energy prices rises using well targeted subsidy measures and supports the Energy Bill Relief Fund component of the Energy Price Relief Plan to achieve this end.
However, it is our strong contention that the other two components of the Energy Price Relief Plan — i) a temporary cap on wholesale east coast gas prices and ii) an ongoing mandatory code of conduct to regulate the east coast gas market — risk making the underlying problem worse in the medium to long term.
Investors in large energy projects in Australia already face the compounding effect of multiple sources of investment uncertainty and risk — including increasing coal royalties and gas moratoriums at the state level, and the Australian Domestic Gas Security Mechanism and the Underwriting New Generation Investments Scheme at the Commonwealth level.
Many of the investors that Australia will rely upon to make enormous investments in our decarbonised energy future are incumbent investors in our energy market today. To add to their investment uncertainty and risk at the very time that we need to be attracting more investment in new energy supply to lower energy prices, is completely counterproductive and risks derailing an orderly transition to a decarbonised economy.
As the Government is now proceeding with this policy approach despite the issues raised by the BCA, it is essential that formal triggers for removal of the mandatory code, after some temporary period, are required to minimise the negative impact of this regulation on incentives to invest in Australia’s energy future.
These triggers should be designed to reflect the circumstances of the current energy crisis, and other temporary factors contributing to the current tightness in east coast energy markets. These triggers should also be subject to a separate consultation with industry to ensure that they are practical and serve the intention of removing regulatory disincentives to invest in Australia’s east coast gas market.