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Price cap putting pressure on retailers

AGL confirmed it cannot secure long-term affordable gas supplies suitable for major customers.

AGL confirmed it cannot secure long-term affordable gas supplies suitable for major customers. Photo: Getty

Gas retailers have been forced to stop taking new large-scale customers as the federal government’s price cap sparks uncertainty in the market.

Some retailers have stopped accepting new industrial and commercial customers, and are letting expiring contracts fall onto expensive default tariffs, as they have not been able to secure long-term affordable supplies from producers.

It’s been widely reported that major gas suppliers have suspended talks with retailers for new supply contracts due to the uncertainty triggered by the government’s wholesale price cap on gas.

Energy giant AGL confirmed it has been unable to secure long-term affordable gas supplies suitable for its commercial and industrial customers.

“AGL’s commercial and industrial customers who are not contracted for the period from January 1, 2023, have been placed onto default tariffs (or remain on default tariffs),” an AGL spokesperson told AAP.

The company is still accepting new retail customers.

Federal parliament was recalled before Christmas to pass the legislation for the temporary gas price cap following an agreement by the prime minister and state and territory leaders at national cabinet.

The price cap applies to new domestic wholesale gas contracts by producers on the east coast and came into force on December 23.

Liberal frontbencher Dan Tehan said intervening in the energy market was always going to have consequences.

“We warned that this would be the consequence, economists warned that this would be the consequence,” he told Sky News.

“And here we are starting the new year and energy is going to be the number one issue for the government, and their first attempt to try and fix it has been a failure.”

He said the government should go back to the drawing board and deliver a solution that would not restrict supply.

“They’ve got to reverse those policies which were designed at limiting supply and they’ve got to be doing everything they can working with the states and territories to get more gas onto the market.”

Independent senator Jacqui Lambie is also worried the price caps would not work and called for a national gas reservation policy, similar to that used in Western Australia.

She also said gas companies were making considerable profits and exhibiting anti-competitive behaviour.

“They are like a cartel and we need to break it up, something has to give here,” she told Sky News.

The energy minister and government regulators have not yet responded to requests for comment.

– AAP

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