ACCC issues Moomba to Sydney gas pipeline final approval
The Australian Competition and Consumer Commission today issued its Final Approval on the access arrangement proposed by East Australian Pipeline Ltd for the Moomba to Sydney pipeline.
"In response to the ACCC's Final Decision, EAPL submitted a revised access arrangement on 23 October", ACCC Chairman, Mr Graeme Samuel, said today. "This revised access arrangement did not fully comply with the amendments required in the decision. As a consequence the ACCC has drafted and approved its own access arrangement as required under the Gas Code. The access arrangement will come into effect on 1 January 2004".
The ACCC has considered the decision by the Federal Minister for Industry, Tourism and Resources to revoke coverage between Moomba and Marsden with effect from 11 December 2003. The Minister also determined that coverage of the MSP mainline between Marsden and Wilton and the regional laterals is to stand. The ACCC considers that the access arrangement (including reference tariffs) it has drafted and approved accommodates this partial revocation of coverage.
"For instance reference tariffs in the Final Approval have been established on a cents/GJ/km basis. This would have translated into a starting tariff of $0.50/GJ on the Moomba to Sydney segment of the pipeline (GST exclusive) which compares with the $0.66/GJ currently being charged by EAPL. Separate tariffs have been set for gas being transported along the regional laterals.
"Even though the ACCC has approved a lower tariff, EAPL's cash flows will not be substantially affected in the short term", Mr Samuel said. "This is because EAPL has a contractual arrangement with its main customer, AGL, under which AGL is required to make minimum monthly payments to EAPL regardless of the level of regulated tariff.
"The ACCC considers that proceeding to the Final Approval ensures that regional NSW centres which do not have alternative gas transmission services can benefit from the access arrangement.
"EAPL may at any time submit revisions to the access arrangement or may seek review of the ACCC's decision under the terms of the Gas Pipelines Access Law".
The Final Approval and revised access arrangement will be available from the ACCC's website.
Under the National Gas Code, East Australian Pipeline Ltd was required to submit an access arrangement for the Moomba to Sydney Pipeline.
The access arrangement describes the terms and conditions on which EAPL will provide access to the MSP. The terms and conditions include the price (known as the reference tariff) that EAPL can charge for providing its services.
The ACCC issued its Final Decision relating to the MSP access arrangement on 2 October 2003. Following the issuing of this decision, EAPL submitted a revised access arrangement.
The ACCC has assessed this revised access arrangement and has concluded that as a whole, EAPL's proposed access arrangement does not incorporate the amendments specified in the Final Decision, nor otherwise satisfy the ACCC's reasons for requiring the amendments. Accordingly, the ACCC has made a further final decision (Final Approval) not to approve the revised access arrangement submitted by EAPL.
Where a revised access arrangement is not approved the regulator must draft and approve its own access arrangement. The ACCC has now done this and has made changes to the revised access arrangement submitted by EAPL so that it complies with the amendments, or intent of the amendments, set out in the Final Decision. These changes relate to the value of the initial capital base, the weighted average cost of capital, depreciation, non-capital costs, the tariff path, the reference tariff variation methodology and the review and expiry of the access arrangement.
The form of the access arrangement approved by the ACCC closely follows that proposed by EAPL which was deliberately drafted to accommodate a partial revocation of coverage. The ACCC considers the access arrangement it has approved is appropriate for the parts of the MSP which will remain covered once the Minister for Industry, Tourism and Resource's decision takes effect on 11 December 2003. The ACCC notes, however, that EAPL may at any time submit proposed revisions to the access arrangement.
