Centre Alliance senator Rex Patrick says the Morrison government has agreed to act against gas pipeline companies who drive up consumer power costs as the Coalition courts the influential minor party.
Senator Patrick says as part of a deal between the parties struck last week, Resources Minister Matt Canavan pledged to investigate claims that gas pipeline monopolies are price gouging on transport charges, and to crack down on the practice if required.
He said the agreement did not canvass breaking up gas companies that abuse their market dominance, however, Centre Alliance will continue to push for more expansive divestiture powers when the government's proposed 'big stick' laws come before Parliament.
The government struck a deal with the Centre Alliance last week to overhaul gas sector policy as it negotiated its $158 billion tax cut package through the Senate.
Senator Patrick said as part of the talks he met Senator Canavan to discuss concerns about overcharging by gas pipeline operators, and its contribution to rising energy costs.
"I sat in a room with Matt Canavan and said 'mate, we are still getting reports of [companies] gouging', and he said 'we will go and test that'," Senator Patrick said.
As part of the agreement, the government would "react" if the claims were substantiated, Senator Patrick said.
A 2016 report by the Australian Consumer and Competition Commission into the east coast gas market found that monopoly pricing - which is not illegal - was "prevalent" and had led to higher gas prices and lower economic efficiency.
The inquiry also found government regulation was failing to address the issue. In response, the states and territories agreed to a new framework requiring pipeline operators to disclose more information during negotiations with gas shippers, and a new arbitration mechanism if negotiations failed.
In late 2018 the ACCC said the changes had led to some improvement but "pipeline tariffs remain too high".
The government's proposed 'big stick' energy package includes divestiture powers to force energy companies to sell their assets if they do not reduce the prices charged to consumers.
Senator Patrick said the deal with the government did not extend to divestiture powers against gas companies. But his party will move an amendment to have the powers apply to any company that egregiously or repeatedly abuses its market position.
Senator Canavan was unavailable for comment.
Acting Finance Minister Josh Frydenberg said the government would work with Centre Alliance in good faith and was committed to bringing electricity and gas prices down.
"We are exploring options on how we can continue to pursue our long-standing and well established objective and policy commitment to bring down the cost of electricity and to bring down the price of gas on the east coast and to boost the supply of gas into the domestic market," he said.
Three companies dominate Australia's gas pipeline market: APA Group, Jemena and Australian Gas Networks.
Australian Pipelines and Gas Association chief executive Steve Davies siad his organisation would oppose any attempt to change pipeline policy.
He said transmission costs were 8 to 10 per cent of the delivered price of gas and "prices have not increased in real terms for more than a decade".
"Gas users are clearly under significant price stress at the moment and pipeline operators are doing everything they can to deliver low transportation prices to help customers stay in business," Mr Davies said.
He said the recently introduced framework "has led to observable improved outcomes for the market" and applying divestment power to pipeline operators would "increase investment risk which leads to higher costs and worse outcomes for consumers".
- SMH/The Age