2nd Reading Speech: National Gas (SA) (Market Transparency) Amendment Bill

Bills, In Parliament, Speeches

Second Reading

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (15:21): I move:

That this bill be now read a second time.

The government is amending the national energy legislation to expand gas market transparency in the eastern and northern Australian gas markets, which seeks to further facilitate the efficient trade of gas and infrastructure services, promote more effective competition and enable market participants to respond more efficiently to changing market conditions.

Improved market transparency is intended to address a range of information gaps and asymmetries across the eastern and northern Australian gas markets. These gaps and asymmetries mean that not all participants in the market have a common understanding of market prices as well as supply and demand conditions. As a result, these gaps hinder the ability of the market to respond efficiently to changing market conditions, impede effective competition and the efficient trade of gas and infrastructure services, and result in inefficient decisions being made about consumption, production, the use of infrastructure services and longer term investment.

The National Gas (South Australia) (Market Transparency) Amendment Bill 2021 seeks to amend the National Gas Law, set out in the schedule to the National Gas (South Australia) Act 2008, to introduce new and expand existing gas market transparency functions and obligations.

The bill will confer on the Australian Energy Regulator (AER) a new function to collect, analyse and publish gas price information and reporting. This will address the currently limited publicly available information on prices payable for goods and services in the natural gas industry, and address information asymmetries faced by gas users in negotiations. Information to be published will include aggregated and anonymised price information for goods and services in the natural gas industry.

To ensure the AER can successfully perform this new function, the bill provides clear information-gathering powers. Flexibility is provided in the bill for the AER to publish an instrument which specifies the information they require to perform the gas price function and the persons responsible for providing the information.

The bill expands the Australian Energy Market Operators information-gathering powers for the Gas Statement of Opportunities (GSOO). The GSOO provides an assessment of the adequacy or otherwise of the supply side of the market to meet forecast demand over a 20-year outlook period and analyses a range of potential scenarios that may impact the gas market, including identifying longer term development needs in the gas market. The expansion of information-gathering powers directly responds to concerns about the quality of information, which is obtained through voluntary surveys that AEMO currently has to rely upon to prepare the GSOO.

The bill expressly provides for persons in control of information related to natural gas to provide such information to AEMO if required to do so under the National Gas Rules. It also provides for AEMO to make GSOO procedures. The procedures are a form of statutory instrument for the collection of the information for the GSOO. Persons to whom the procedures apply are required to comply with them.

The bill expands the scope of the Natural Gas Bulletin Board. The Natural Gas Bulletin Board provides market participants and other interested parties with ready access to information on the capacity and utilisation of key production, transportation and storage facilities on the east coast. Expanding the scope of the bulletin board seeks to address information gaps, including opaqueness surrounding the supply and availability of gas in the eastern and northern Australian gas markets and lack of publicly available information on gas use by liquefied natural gas facilities.

The information that must currently be contained on the bulletin board relates to natural gas services and secondary capacity. The bill expands this scope to the natural gas industry. In support of this expanded scope, the bill places an obligation on persons in control of information related to the natural gas industry to provide such information to AEMO if required to do so under the National Gas Rules.

The bill provides for the South Australian minister to make the initial National Gas Rules that will implement the transparency reforms. Significant public consultation on the initial rules has already been undertaken. Once the initial National Gas Rules have been made, no further rules can be made under this power. The Australian Energy Market Commission is provided with power to make National Gas Rules on relevant gas market transparency matters going forward.

By introducing this reform, numerous benefits will accrue, including lowering search and transaction costs, facilitating more efficient investment and enabling more informed and efficient decisions to be made by market participants across the supply chain.

I note that the now opposition previously supported the introduction of new and expanded existing gas market transparency functions and obligations in the National Gas Law, and I look forward to receiving their support in progressing this bill through the parliament. I commend the bill to members. I seek leave to insert the explanation of clauses in Hansard without my reading it.

Leave granted.

EXPLANATION OF CLAUSES

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of National Gas Law

4—Amendment of section 2—Definitions

Certain definitions are inserted or amended for the purposes of the measure.

5—Amendment of section 10—Things done by 1 service provider to be treated as being done by all of service provider group

Amendments are made to an interpretative provision under the Law.

6—Amendment of section 27—Functions and powers of the AER

Provision is made conferring functions on the AER in relation to goods or services in the natural gas industry.

7—Substitution of heading to Chapter 2 Part 1 Division 4

The heading to Chapter 2 Part 1 Division 4 is substituted.

Division 4—Regulatory information notices, general regulatory information orders and price information orders

8—Amendment of section 45—Meaning of general regulatory information order

Provision is made that a general regulatory information order does not include an order that is made as a price information order.

9—Amendment of section 46—Meaning of regulatory information notice

Provision is made that a regulatory information notice does not include an order that is made as a price information order.

10—Insertion of section 46A

Section 46A is inserted:

46A—Meaning of price information order

New section 46A is an interpretative provision relating to price information orders.

11—Amendment of section 48—Service and making of regulatory information instruments

Amendments are made relating to price information orders.

12—Amendment of section 50—AER must consult before publishing a general regulatory information order

This amendment is consequential.

13—Substitution of section 51

Section 51 is substituted:

51—Publication requirements for orders

Provision is made for publication requirements for orders.

14—Amendment of section 53—Form and content of regulatory information instrument

Amendments are made relating to price information orders.

15—Amendment of section 54—Further provision about the information that may be described in a regulatory information instrument

These amendments are technical or consequential.

16—Amendment of section 55—Further provision about manner in which information must be provided to AER or kept

These amendments are technical.

17—Amendment of section 57—Compliance with general regulatory information order

An amendment is made relating to compliance with general regulatory information or price information orders.

18—Amendment of section 57A—Confidentiality issues

Section 57A is disapplied to price information orders.

19—Amendment of section 57B—Disclosure of information given to AER in compliance with regulatory information instrument

These amendments are technical in relation to price information orders.

20—Amendment of section 58—Exemption from compliance with general regulatory information order

This relates to amending the heading to section 58 of the Law.

21—Amendment of section 59—Assumptions where there is non-compliance with regulatory information instrument

Section 59 is disapplied to price information orders.

22—Amendment of section 63—Protection against self-incrimination

This amendment is technical in relation to price information orders.

23—Amendment of section 74—Subject matter for National Gas Rules

These amendments are technical or consequential.

24—Amendment of section 91D—Object and content of gas statement of opportunities

This amendment is technical.

25—Amendment of section 91DA—AEMO’s obligation in regard to gas statement of opportunities

AEMO is conferred with functions relating to collecting, collating and deriving certain information.

26—Insertion of sections 91DB to 91DH

New sections 91DB to 91DH are inserted:

91DB—Information for the gas statement of opportunities

Provision is made in relation to persons giving AEMO information for the gas statement of opportunities.

91DC—Person cannot rely on duty of confidence to avoid compliance with obligation

This section provides that a person must not refuse to comply with the requirement in section 91DB on the ground of any duty of confidence.

91DD—Giving AEMO false or misleading information

This section provides that a person must not give GSOO information to AEMO that the person knows is false or misleading in a material particular.

91DE—Immunity of persons giving GSOO information to AEMO

Provision is made in relation to immunity of persons giving GSOO information to AEMO.

91DF—GSOO Procedures

AEMO is authorised to make GSOO Procedures.

91DG—Nature of GSOO Procedures

Provision is made about the nature of GSOO Procedures.

91DH—Compliance with GSOO Procedures

This section provides for compliance with GSOO Procedures.

27—Amendment of section 91MB—Compliance with Retail Market Procedures

Section 91MB(2) is deleted.

28—Amendment of section 218—AEMO’s obligation to maintain Bulletin Board

These amendments are technical.

29—Amendment of section 219—AEMO’s other functions as operator of Natural Gas Services Bulletin Board

These amendments are technical.

30—Substitution of sections 223 and 223A

Sections 223 and 223A are substituted by section 223:

223—Obligation to give information to AEMO

Provision is made for a person who has possession or control of information in relation to the natural gas industry to be required to give the information to AEMO for use in connection with the Natural Gas Services Bulletin Board.

31—Amendment of section 224—Person cannot rely on duty of confidence to avoid compliance with obligation

This amendment is consequential.

32—Amendment of section 225—Giving AEMO false and misleading information

This amendment is consequential.

33—Amendment of section 226—Immunity of persons giving information to AEMO

This amendment is consequential.

34—Insertion of section 226A

New section 226A is inserted:

226A—Provision of certain information to AER

Provision is made for the Rules to provide for certain requirements on persons subject to the operation of the Chapter to provide certain information to the AER (and other matters).

35—Amendment of section 228A—Compliance with BB procedures

Section 228A(2) is deleted.

36—Insertion of section 294FA

New section 294FA is inserted:

294FA—South Australian Minister to make initial Rules relating to enhanced market transparency

The South Australian Minister is authorised to make the initial Rules relating to enhanced market transparency.

37—Amendment of Schedule 1—Subject matter for the National Gas Rules

Certain subject matters on which National Gas Rules may be made are inserted into Schedule 1 of the Law. Other amendments to subject matters in the Schedule are consequential.

The Hon. H.M. GIROLAMO (15:27): I take this opportunity to speak in parliament today about the National Gas (South Australia) (Market Transparency) Amendment Bill 2022, and I indicate that the Liberal Party supports it. The gas markets in eastern and northern Australia are regulated through the operation of the National Gas Law, the National Gas Rules and associated regulations.

The National Gas Law is hosted by South Australia and has the force of law for participating jurisdictions. All states and territories, including Western Australia on a limited and modified basis, and the commonwealth are participating jurisdictions. The National Gas Law can be modified by the South Australian parliament at the unanimous direction of the energy council.

This gas transparency bill has been developed and consulted on over a number of years, which ultimately led to it being ratified by the energy ministers in July 2021 and then introduced into the SA parliament by the former Liberal government in September 2021. The bill I am speaking on today is fundamentally the same and, as a result, the opposition will be offering bipartisan support for it.

On 20 July 2021, energy ministers agreed to further refinements to the framework, taking into account feedback provided in response to consultation. Improved market transparency will deliver a number of benefits, including:

enable more informed decisions to be made about gas consumption, gas production, exploration activities and infrastructure services, facilitating more efficient planning and investment across the market;

provide more timely and accurate signals about how well the market is functioning and whether there are any potential problems with the supply-demand balance, which will enable the market to respond more efficiently to changing market conditions; and

promote competition where competition is possible and the efficient trade of gas and infrastructure services by aiding the price discovery process, lowering search and transaction costs and reducing the information asymmetry and imbalance in bargaining power that users can face at each stage of the supply chain—a very important element during these challenging times and potential energy crisis.

The amendment bill will give the Australian Energy Regulator a new function to collect, analyse and publish information about prices for goods and services in the natural gas industry. Currently, the ACCC gas inquiry collects some pricing information; however, the inquiry is scheduled to finish in 2025 and, in the absence of any other measures, the market will likely revert back to an even more opaque market.

This amendment bill will give the Australian Energy Regulator new powers to publish an instrument requiring information to be given to the Australian Energy Regulator for the purpose of its new gas price reporting function. Once implemented, the transparency reform measures will enhance transparency in the eastern and the north-eastern Australian gas markets. This will address information gaps relating to gas and infrastructure prices, supply and availability of gas, gas demand, and infrastructure used to supply gas to end-markets.

The Hon. T.A. FRANKS (15:31): I rise to speak on the National Gas (South Australia) (Market Transparency) Amendment Bill on behalf of the Greens and on behalf of my colleague the Hon. Robert Simms. This bill was first introduced in the other place in September last year by the Marshall government. At that time, the Minister for Energy and Mining spoke of the series of events that led to the introduction of this bill.

In 2016, energy ministers agreed to implement gas market reform measures, including market transparency. In 2018, there was a further review that identified issues in the gas markets, which again led to the energy ministers being tasked with developing transparency measures. Then, in 2020, energy ministers endorsed the final recommended package of measures.

We know that the wheels of government can be slow, but by the time this bill was first introduced in the other place, there had already been five years of inaction on market transparency for the gas industry. Now here we are in 2022, six years after that initial review, where we see daily news about Australia being on the precipice of a gas crisis. It appears, this time, successive governments have moved far too slowly.

As I understand it, one of the outcomes of the meeting of energy ministers last week was to push this legislation through as a matter of urgency. This was a foreseen issue, but not enough was done at the time. I would hope that we can learn a lesson from this and start acting now on issues we can see coming down the line. Indeed, this is the only way we will build a resilient future in a changing climate.

The Greens support additional transparency measures to ensure the market becomes more robust and equitable; therefore, we will be supporting this bill. It is our understanding from the briefing provided by the energy minister that gas suppliers are aware this reform is coming and consultation has taken place over many years—perhaps too many years, but we are pleased that this bill is now here.

Gas and electricity costs are increasing and, as stated by the federal Minister for Climate Change and Energy, Chris Bowen, ‘Australian energy markets are facing a perfect storm.’ Introducing transparency measures will provide certainty to the market, which will create better outcomes not only for the market but of course for the end users.

Households are already suffering from the increased costs of fuel and groceries. We need to do all we can to address cost-of-living pressures and to stabilise the market to ensure households are not hit with unexpected gas price hikes. The Greens believe that distributed, diverse and competitive energy generation contributes to minimising energy costs for households and business. It seems pretty simple that a competitive market is also a transparent market, and that is why we are supporting this bill.

We do want to note, however, that in the middle of this gas crisis, the Labor government, the Malinauskas government, refused to support a Greens’ bill to give South Australian families, South Australian residents, the ability to choose not to have gas installed in new developments. Instead, the government sided with developers, mandating gas connections in some new homes. This is an issue that has been raised by my former colleague the Hon. Mark Parnell back in 2018 and was raised again this year, in this place, by the Hon. Robert Simms.

I have to say, according to the Grattan Institute, consumers who choose an all electric house can save at least $2,184 over 10 years. This is a cost-of-living issue, which everyone else seems to be so happy to talk about except when it comes to the issue of mandating gas, which is quite an extraordinary situation here in South Australia.

The practice of property developers mandating gas connections in new homes locks people into higher energy bills and higher emissions. It is quite extraordinary. It is a lose-lose situation on both levels. The bill introduced by my colleague the Hon. Robert Simms would have given consumers greater choice to move away from gas, so we are disappointed that the Malinauskas government did not seize that opportunity when they had the chance.

This is also a good opportunity, however, to reiterate the need to transition away from fossil fuels. This bill addresses pressing market failures, but what we have warned for decades is that over-reliance on gas is going to create problems as our planet warms. The sooner we move away from non-renewable fossil fuels, the more resilient our communities will be.

According to the CSIRO, renewables are now the cheapest form of energy generation in our nation. We need to replace fossil fuels with renewables backed by sufficient storage to ensure our energy needs are met moving forward. We know we can do it. South Australia has been leading the country in renewables usage and storage.

The Greens support this bill. It is an important measure to stabilise the national gas market. It is long overdue and we see this as an opportunity to start addressing our future energy needs proactively rather than continuing to delay action, which then sees us reacting to crises in a rush, as we are doing by fast-tracking the passage of this bill today. With that, I commend the bill.

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (15:36): I thank the Hon. Ms Girolamo and the Hon. Ms Franks for their contribution and all members for their thoughts on this bill. I am very pleased to hear that we are going to have support on this important bill.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (15:38): I move:

That this bill be now read a third time.

Bill read a third time and passed.