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ACCC to target Australian gas pipeline monopoly

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World Pipelines,

The Australian Consumer and Competition Commission is looking to drive down energy prices by targeting the gas pipelines market, following the release of its domestic gas shortage inquiry.

The ACCC Gas Inquiry 2017 - 2020 report found that while action has been taken by energy companies to remedy a predicted domestic gas shortfall across the east coast, prices still remain high.

ACCC chairman Rod Sims said that while energy companies have acted to address a forecast domestic gas shortfall, the market remains challenging.

Sims said the next major focus for the ACCC is reducing the impact of Australia’s pipeline monopoly.

“We want to regulate the pipeline monopoly,” Sims told press.

“We can’t break up it as the situation is what it is, but there are actions we can take.”

The majority of Australia's gas pipelines are owned by three companies: APA Group, Jemena, and Australian Gas Networks.

Sims said the ACCC will first ensure pipeline owners cannot stop others from accessing gas pipelines.

Secondly, in terms of pricing, Mr Sims said there will now be an arbitration system put in place where issues over access exist.

“This means when contracts expire companies can seek arbitration.”

He said these actions will have a direct impact on gas prices and better results for gas users.

“In two to three years pipeline prices will come down, and we’ll see lower flow-on prices in Victoria and NSW,” Sims said.

The ACC report also supported the potential of AGL Energy’s LNG regasification plant in Victoria to reduce the state’s gas shortages.

Energy policy and gas prices have been key concerns for Prime Minister Malcolm Turnbull, who personally intervened and announced in June that the government will give itself the power to license gas exports in an attempt to bring down domestic gas prices.

He threatened to block exports unless the energy producers agreed to boost local supply.

“Gas users in the southern states already face higher gas costs due to the declining local production and significant limits on new exploration,” Simms said.

“This is made worse by constraints on pipeline capacity to bring gas down from Queensland. This limits competition in the supply of gas to the southern states.”

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