New minister Madeleine King has asked resource companies to find more gas to direct into Australian markets as she considers pulling the ” gas “trigger”.
However, the resources minister has also claimed more coal supply was key to combating a brewing energy crisis.
It comes as treasurer Jim Chalmers called on the Australian Competition and Consumer Commission to investigate factors behind spiking energy prices, flagging the new Labor government was mulling “several actions” to address electricity and gas concerns.
“Given the interdependence between gas and electricity, managing coal supply issues is crucial in relieving unusually high spot prices in the gas market,” King said.
Energy minister, Chris Bowen, will host a video conference meeting of state and territory energy ministers on Wednesday afternoon to address what he described last week as a “perfect storm” of factors supercharging energy prices. A cold snap across much of Australia led to a surge in demand for heating, on top of international gas prices spiking due to the conflict in Ukraine, maintenance on some key local power stations, and even flooding of some coal mines leading to a shortfall in fuel.
Last week, Bowen claimed Australia would have been “much better placed to deal with the current challenges” if the former Coalition government had invested more in renewable energy, storage, and transmission, claiming the Morrison government’s policies had left the nation “ill-prepared for the challenges we are facing”.
Government sources said they believed greater collaboration between state and commonwealth governments would be a key factor in reducing prices, with the meeting to discuss several small changes at the margins which can be made in the short term.
The Australian domestic gas security mechanism, referred to as a gas supply “trigger, ” is a policy available to the resources minister that can require natural gas projects to limit exports or find new gas sources.
Sign up to receive the top stories from Guardian Australia every morning
Last week, Bowen shrugged off suggestions that this could be an immediate fix, noting the mechanism would not come into effect until the following January and was “not the answer to this short-term crisis”.
But with some of the factors in the current energy shortfall potentially persisting for months, King was still considering enacting the ADGSM trigger.
“The ADGSM remains on the table as an option, but it was not designed to target price spikes like the one we currently see. The ADGSM was designed to address lack of supply – at present, there is no evidence there is a lack of supply,” King told Guardian Australia.
King has also been having what she called “very positive” discussions with large gas companies like Origin, Shell, and Santos about what they can do to inject more supply into the Australian market, such as finding supply not already contracted out or having conversations with large energy consumers about temporarily slowing down their shipments to get more gas to households. However, with much of Australia’s gas tied up in long-term contracts and structural constraints such as gas pipelines already operating near full capacity, options to increase supply may be limited.
The Australian Energy Market Operator said on Thursday that, after activatings supply guarantee mechanism calling on producers to increase supply, the south-west Queensland pipeline into New South Wales, Victoria, and South Australia was last ting at 98% capaclast week ity.
“Gas industry representatives indicated openness to working in good faith and discussed some of the challenges of increasing gas supply in the southern states, such as pipeline capacity from Queensland to the south,” King said.
“This is a complex, multi-faceted problem … While there is no single, simple solution to address high gas and power prices in the short term, the government is working with regulators, states, and industry, including on reform for the medium and long term.”
The gas supply guarantee led to more gas flows and a reduced demand with the easing of last week’s cold snap saw the guarantee mechanism turned off on Friday. Aemo said its administered price caps of $40 per gigajoule would remain until Tuesday. The government believes that even small factors, such as getting some flooded coal mines back online in the coming days, will help further ease energy prices and supply shortfalls.
“It is important to get coal energy generation back online as soon as possible, noting a great deal of electricity generated for consumers in the national energy market is from coal-fired power stations,” King said.
“Over the long term, additional gas and renewable electricity generation capacity, as well as storage and transmission, will need to come online to meet Australia’s future energy needs as we pursue a net zero emissions future.”
Chalmers said on Monday he had written to the ACCC with his “deep concern about skyrocketing electricity and gas prices”, asking the commission to probe any inappropriate conduct in the market.
“While there are several factors driving these price increases, the ACCC plays a critical role in monitoring and reporting on developments in the electricity and gas markets, and it will be important for the ACCC to ensure that the factors influencing prices in these markets are made fully transparent,” Chalmers said in a statement on Monday.
“I also expect that the ACCC will investigate any concerns about anti-competitive or false and misleading conduct in these markets and take appropriate action.
“I have asked the ACCC to advise the government of any regulatory changes that may be required to ensure these markets function properly.”
Chalmers said the new Labor government – including Bowen, King, and industry minister Ed Husic – was “considering several actions in response to the energy crisis we’ve inherited”.
The treasurer did not detail what actions or possible regulatory changes were under consideration.
Husic, currently in Indonesia as part of a government delegation led by the prime minister, Anthony Albanese, has been speaking with large industrial gas consumers, such as manufacturers, who have expressed concerns about whether the impact of rising prices may have flow-through implications on their workforce.
Industry accounts for about half of Australia’s domestic gas consumption, according to Aemo.
