It has been a few weeks since the Australian government rushed through its energy market intervention bill. How’s it working out? As one might expect:
“Major energy retailers across the country have been forced to stop taking on new gas customers while others ramp up their prices, as they struggle under the government-imposed 12-month price cap.
Companies are facing uphill battles in securing ongoing supply from producers, with some of the east coast’s biggest gas producers upholding their suspension on new supply offerings.”
The 12-month price cap will be replaced with a yet-to-be-defined “reasonable price” clause when it expires, making multi-year contracts difficult. Too high and you could get whacked by the ACCC; too low and you’re not getting value for your shareholders.
That policy uncertainty has left energy retailers unable to secure supply contracts of any significant length. That is then passed on to their customers (households/businesses), who are forced onto more expensive default tariff rates as their contracts expire.