The Treasury and the department are seeking input on the design of the gas elements of the government’s plan to address high energy prices and ensure that our wholesale gas markets deliver adequate supply at reasonable prices and on reasonable terms to domestic users.
A mandatory code of conduct is proposed to address systemic issues within the wholesale gas market and guide participants’ behaviour. As part of the code, a reasonable pricing framework will provide a basis for producers and buyers to negotiate domestic wholesale gas contracts at ‘reasonable prices’, which should reflect the cost of domestic gas production, including a reasonable return.
A temporary, emergency price cap is also proposed to ensure industry remains viable, and to limit the impact of global energy pressures on households and businesses.
The government intends to introduce primary legislation this year to put in place a strong enforcement framework for the mandatory code and price cap.
Consultation on the draft Bill closes on 13 December 2022.
Consultation on the price cap will close on 15 December 2022, reflecting the urgent and temporary nature of this intervention. Subject to the outcomes of the consultation, it will be implemented promptly via regulation before the end of the year.
Consultation on the mandatory code, including the reasonable pricing provision, will remain open until 7 February 2023, and it will be implemented via regulation in early 2023.
See the Treasury website for more information.