Senate Economics Legislation Committee [Part 2], , 3:01:41 to 3:05:49
Examination of the proposed 110% oversupply requirement in the gas reservation policy and whether the domestic market has the capacity to absorb additional supply.
Topics: Energy prices, Fossil fuels
Speakers: Paula Svarcas, Senator Susan McDonald, Speaker 20, Unknown Speaker
together at the moment >> discussing gas reservation policy
>> on tomorrow. >> Tomorrow
>> and all day. Well, a chunk of tomorrow. Chunk of tomorrow. Yeah.
>> I was more saying that to finish early tonight.
>> Hey,
>> I was more saying that just to remind you to finish early tonight.
>> Oh, thank you. Oh, what be the fun in that? We can do it again tomorrow. You're not here tomorrow, though, are you, Minister? No. Oh, see, that's why I've got to do it is so that you're here for it. I'd hate you Um, good evening. I want to ask you, gas market demand is finite, cannot be physically overs supplied. So, this 10% over supply that's proposed in the legislation, how can it deliver a physical over supply of the market? You know, once
Senator Paulus, head of division and um gas reservation task force. the over supply is designed to be able to meet the domestic demand which as you fluctuates depending on the needs of the sector and when it's when gas is required. So the and the um 110% is is the average figure over the year. So we believe that with the current storage capacity and the uptake that industry is asking for of the of gas that there is capacity in the system to absorb the 110%. And if there's not >> and in usage and also senator importantly what the um the draft legislative package provides for is um is if if the market cannot absorb the 110% um requirement of the domestic supply obligation that there is um there is only an obligation to supply 90% and 10% of that is um is a flexible amount. so that there can there is flex in the system in order to be able for um producers to be able to meet their DSO
It's a bit of a punt though, isn't it? It's a big punt if we get this wrong and uh and we try and uh legislatively force uh supply into a market that is already um the the the impact on particularly domestic producers in the southern markets could be catastrophic for their investment decisions.
>> So there two ways in which um the market is calibrated. So there is that um what I'm going to call banking and borrowing provisions the um 9010 provision in the legislative package so that if the market cannot absorb the full um the full amount of the domestic supplyation like I said that that some amounts can be deferred for future years um and there's also on an annual basis the regulator will be doing a demand calibration to the 110% so the whole and that will include taking into into account any um banked or borrowed amounts from past years. So there is a leveling measure um attached to the gas reservation package to be able to provide for the needs of the markets going forward taking into account banking and borrowing and the um and the domestic demand.
The Graten Institute provided evidence at the gas market uh the gas reservation inquiry last Friday that 102% would be a much more appropriate percentage to seek to over supply the market. Um what analysis have you done that would allow you to be confident that 110% is actually the right number?