The Australian Energy Regulator (AER) is to be the designated regulator for gas transmission pipelines in all states and territories (except WA) and for transmission and distribution pipelines in the Northern Territory. The enabling legislation to transfer the ACCC’s current functions in this area to the AER has yet to be enacted. However, for administrative simplicity, all ACCC documents relating to the gas transmission regulation function have been included on the AER website.
The functions to be transferred to the AER are expected to include:
consideration and approval of access arrangements submitted by service providers under the National Third Party Access Code for Natural Gas Pipeline Systems. This process involves setting terms and conditions, including reference tariffs, which requires determination of a range of measures including asset valuation, a fair allocation of justified costs, a reasonable rate of return and an acceptable depreciation methodology
monitoring and enforcing reference tariffs, ring-fencing, incentive regulation and other access arrangement provisions
arbitrating disputes relating to the terms and conditions of access
overseeing competitive tendering processes for new transmission pipelines
contributing to the ongoing refinement of the national framework for access to transmission and distribution infrastructure in the gas industry.
The ACCC will continue to assess access undertakings and applications for authorisation as these are instruments under the Trade Practices Act.
Authorising gas marketing arrangements
Gas exploration and development is usually carried out under joint venture arrangements in which costs, risks and benefits are shared by a number of companies. Typically, joint venturers seek to market their gas on common terms and conditions, including price, and to guarantee their income stream by long-term sales contracts with gas utilities and other large customers.
Both the initial agreements to coordinate marketing and the subsequent individual sales contracts could breach Trade Practices Act prohibitions against anti-competitive conduct. These potential breaches of the Act may, however, be authorised if the Commission is satisfied that the benefits to the public exceed the anti-competitive costs.
Recent authorisations granted by the Commission include those for the Market System and Operation Rules (MSOR) which underpin Victoria's wholesale gas market, for an expansion of the Western Australian North West Shelf Project and for the new supply arrangements from the Mereenie Basin in the Northern Territory.
Please note that the AER deals only with matters concerning natural gas. Any inquiries concerning liquefied petroleum gas (LPG) should be directed to the Transport Branch of the ACCC in its Melbourne office or email petrol.monitoring@accc.gov.au.
