Announcement date
9 December 2022
Link to announcement
Energy Price Relief Plan | Prime Minister of Australia (pm.gov.au)
Link to announcement (10 July 2023)
Joint media release: Finalised gas code delivers for Australians | Ministers (dcceew.gov.au)
Problem being addressed
A range of factors have been pushing up domestic wholesale electricity and gas prices since early 2022. In the October Budget, retail electricity prices were expected to increase by an average of 20 per cent nationally in late 2022, and a further 30 per cent in 2023-24. The latest data indicates that absent intervention, national electricity prices in 2023-24 are expected to rise even higher by 36 per cent. Higher electricity costs will have both a direct and indirect impact on inflation, increasing the prices of goods and services across the CPI basket. Retail gas prices were also expected to increase by an average of 20 per cent nationally in 2022-23, and a further 20 per cent in 2023-24.
Proposal
On 9 December 2022 the Prime Minister announced a combination of three Commonwealth responses to address the problem:
- Introducing a mandatory code of conduct for the wholesale gas market that includes a reasonable pricing provision
- Introducing a temporary 12-month gas price cap
- Bringing forward commencement of reforms to the Australian Domestic Gas Security Mechanism (ADGSM)
Assessed Impact Analysis outcome
Adequate
Assessment comments
OIA notes that this announcement included decisions of National Cabinet on complementary policies that were outside the scope of the Impact Analysis, including the announcement of New South Wales and Queensland Government’s work on a temporary cap on the price of coal. OIA acknowledges that the coal cap is likely to reduce some of the risks associated with the introduction of a gas cap.
Regulatory burden
$0.96M
Consultation
Following our assessment of the Impact Analysis, a consultation paper was released seeking stakeholders’ views on the proposal, the enabling legislation and subordinate instrument. For more details see:
Options to ensure the domestic wholesale gas market delivers for Australians | Treasury.gov.au
Addendum
Following additional consultation and design over early 2023, an addendum was prepared by DCCEEW and Treasury on the impacts of the mandatory gas code of conduct. This addendum provides an update on the impact of the policy changes compared to the original policy proposal (detailed in the December 2022 IA) and estimates a saving of $4.32 million in regulatory burden over ten years; the policy is expected to reduce the annual regulatory burden of the broader policy from $0.96M to $0.53M. The OIA has not assessed this addendum.