Competition and Consumer (Gas Market Code) Regulations 2023
The Competition and Consumer Committee of the Business Law Section of the Law Council of Australia (the Committee) provided a submission to the Department of Climate Change, Energy, the Environment and Water in response to the Competition and Consumer (Gas Market Code) Regulations 2023 consultation.
The Committee observes that the framework contained in the current exposure draft does not represent best practice economic regulatory design and creates significant regulatory uncertainty in a sector of the economy that is underpinned by long term investment decisions by both sellers and buyers. The Committee is concerned that a combination of exemptions determined by substantively unfettered Ministerial discretion, a price cap that may periodically be amended by reference to opaque criteria, in each case without merits review or any realistic possibility of review for error, and very substantial penalties for non-compliance create significant risk and uncertainty.
The first design issue arises in relation to the extent of ministerial discretion. For large gas producers supplying at least 100PJ of gas in the preceding financial year, or any producer selling any quantity for export, the Code regulates the price of their domestic gas sales unless a Ministerial exemption is granted on the basis of voluntary enforceable supply commitments which are satisfactory to the Minister.