Transparency 'key' to gas market's long-term future
In a speech to be delivered on Thursday, EnergyAustralia managing director Richard McIndoe will outline the need for change, only days after a Grattan Institute report highlighted the emerging difficulties in the sector.
"The structures that served us to this point no longer suffice," Mr McIndoe will say. Over the past 20 years, east coast gas markets had undergone big changes that were yet to deliver "national, long-term transparent gas pricing and liquid markets".
"In Australia, the energy value chain - retail, production, transmission - is held by just a few. The size of our market, particularly the number of players, places a massive premium on transparency.
"The gas market structures that have underpinned the industry in the past simply are not up to the challenges of the future."
Mr McIndoe called for transparency in gas markets, which would help pave the way for the needed investment in new production - "critical if we are to avoid a supply crunch and unnecessarily high prices into the future".
"Liquidity will transform the market by providing a visible and tradeable price for gas ... And consumers will have in their hands the information to know they are not paying more for gas than their neighbours, their competitors or overseas markets.
"They're empowered with the knowledge they're getting access to gas at a competitive price."
Frequently Asked Questions about this Article…
Richard McIndoe said Australia needs greater gas market transparency, arguing that existing market structures no longer suffice and that a national, long-term transparent gas pricing and more liquid markets are needed for the east coast.
Transparency matters because the east coast market has changed a lot over 20 years but still lacks national, long-term transparent pricing; with only a few companies holding much of the energy value chain, transparency helps ensure fair prices and supports a more competitive market.
The article says several gas export projects in Queensland threaten to drive domestic prices higher, which is why stakeholders like EnergyAustralia are calling for transparency to help manage price impacts.
Greater transparency would provide clearer price signals and market visibility, which McIndoe says would help pave the way for the investment needed in new production to avoid a supply crunch and unnecessarily high prices.
Liquidity means having a visible, tradeable price for gas; more liquidity makes pricing clearer for investors and consumers, helps markets function efficiently, and gives people confidence they’re paying a competitive price.
The article notes the Grattan Institute report highlighted emerging difficulties in the gas sector, reinforcing calls for change and greater market transparency, though it doesn’t list specific findings in detail.
According to McIndoe, retail, production and transmission are held by just a few players in Australia; that concentration increases the importance of transparency so consumers can see and compare prices and guard against unfair pricing.
Consumers should get clearer, comparable price information — empowering them to know they aren’t paying more than neighbours, competitors or overseas markets — and greater confidence that prices reflect a competitive market.
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