A review of the Australian Domestic Gas Security Mechanism (ADGSM) by the Department of Industry, Innovation and Science has found the Mechanism helped lower gas prices for Australian consumers.
The ADGSM was established in 2017 to ensure there was a sufficient supply of natural gas to meet forecast needs.
Minister for Resources and Northern Australia, Senator Matt Canavan said the review findings confirmed the ADGSM’s effectiveness in stabilising the domestic gas market and gas pricing.
“Gas offers are around half the peak prices of over $20 per gigajoule from early 2017, before the ADGSM was introduced,” Senator Canavan said.
He said the review’s findings were supported by the Australian Competition and Consumer Commission (ACCC) and Australia’s energy market bodies including the Australian Energy Market Operator (AEMO) and the Australian Energy Regulator (AER).
He said short term gas prices at the Wallumbilla Gas Supply Hub had fallen around 46 per cent between February 2017 and December 2019.
“However, I recognise that some businesses are still finding it difficult to get longer term gas offers and that some price offers remain higher than I want to see, especially when international liquefied natural gas (LNG) prices are low,” he said.
“That is why we will keep the ADGSM in place until its scheduled end in 2023 and the ACCC will continue to monitor the gas sector out until 2025.
The review recommended the Government strengthen the ADGSM’s mechanism for securing domestic gas – the Total Market Security Obligation (TMSO) – and that the ADGSM’s guidelines include the ACCC’s LNG netback price series as a signal of how well a market is functioning in estimating any potential supply shortfall.
Senator Canavan said the measures would help to ensure that the ADGSM achieves its objective of securing gas supply for domestic users.
He said stakeholders would be consulted on the proposed changes to the TMSO.
