13 February 2023
RBB comments on government’s ‘reasonable pricing provision’ for gas producers
In April 2023, the Australian Government sought further views from market participants regarding a mandatory code of conduct aimed at achieving adequate domestic supplies of gas on reasonable terms. Central to the code of conduct is a “reasonable pricing provision” which sought to ensure gas prices are set at reasonable levels.
RBB Economics responded to the government’s initial consultation process. Our view is that a price that ignores the opportunity cost of supplying gas to the east coast market may discourage efficient and socially desirable outcomes from being achieved and should not be defined as “reasonable”.