The legislation, introduced to parliament on Wednesday, would force gas producers to sell up to a fifth of their gas slated for export to the domestic market, effectively sparing Australia from having to compete with international buyers for its own resource. The amount each producer must sell would be set by the energy regulator, with a target of 110 per cent of Australia's actual needs. The government says this "modest oversupply" will put downward pressure on wholesale prices.
Speaking at the National Press Club, Ms King said the rules had been carefully balanced to keep prices fair while ensuring new gas projects remained profitable. "We need gas to support the rollout of renewables. We need gas to have a strong Australian manufacturing industry. We need gas to continue heating our homes," she said.
The government has been reluctant to predict how much prices will fall, having been burned by a previous promise to cut household power bills by $275 through renewables – a target thrown off course by Russia's invasion of Ukraine. Asked for modelling on the scheme's impact, Ms King described the analysis as "commercial-in-confidence". She said an impact assessment would be released but did not commit to it including estimated wholesale price effects.
Industry group Australian Energy Producers has warned the plan could force the sale of gas at rates below the cost of new supply. Chief executive Samantha McCulloch said any price relief would be temporary. "The government cannot expect industry to invest billions of dollars in new gas supply while introducing policies that fundamentally undermine the commercial viability of those investments," she said. Citing Australian Competition and Consumer Commission figures, she noted the marginal cost of new supply sits between $9.50 and $13 per gigajoule, a range needed to encourage investment. Australian Energy Regulator data shows current wholesale prices are between about $10 and $11.50 per gigajoule, depending on jurisdiction.
Ms King said the bill focuses on making gas cheaper for heavy industry and energy generation, but added that cheaper gas prices "will be felt by the consumer".