Draft decision on Roma to Brisbane pipeline revised access arrangement
The Australian Competition and Consumer Commission today issued its draft decision on the Roma to Brisbane pipeline* revised access arrangement.
In its draft decision, the ACCC proposed amendments to APT Petroleum Pipelines Limited's access arrangement.
Under the draft decision, the ACCC accepted an APTPPL proposal that access to the expanded capacity of the pipeline would be negotiated with users.
"This was accepted as the best way to achieve the timely expansion of the pipeline, reflecting the current uncertainty with costs, timing and capacity of expansions", Australian Energy Regulator** Chairman, Mr Steve Edwell, said.
For the first time since the gas code began in 1998 the reference tariff for the pipeline is being set by the ACCC. The ACCC's proposed reference tariff is 10 per cent less than that proposed by APTPPL. The tariff will apply to forward haulage using the existing capacity of the pipeline. As the pipeline is mostly fully contracted, potential users must wait until around 2012 before they can benefit from a lower reference tariff.
The lower tariff reflects the ACCC's decision that the pipeline's initial capital base should be $250.63 million rather than $346.2 million, as proposed by APTPPL.
Mr Edwell said the ACCC's value better reflected the requirements of the gas code. It allowed APTPPL to more than recover its investment in the pipeline.
APTPPL has agreed to establish an electronic register of spare and developable capacity and an electronic bulletin board to help users access details of the spare and uncontracted pipeline capacity. The arrangements will support the pipeline's timely expansion.
The ACCC proposes other services should be negotiable. These could include backhaul, interruptible and park and loan services. Prospective users will be able to use the dispute resolution arrangements under the code should negotiations not provide access to these services on a timely basis.
The ACCC invites written submissions in response to its draft decision by 25 September 2006. The draft decision is available on the AER website, www.aer.gov.au. The ACCC will take into consideration issues raised in submissions before issuing its final decision.
*The Roma to Brisbane Pipeline is the only gas transmission pipeline supplying gas to Brisbane. The pipeline was constructed in 1969 and runs from Wallumbilla (Roma) to Brisbane (Gibson Island). It consists of a mainline and a lateral pipeline, the Peat Lateral. The mainline is about 440 kilometres long. Its capacity has been expanded by compression stations and looping to a nominal licensed capacity of 180 terajoules/day. The pipeline also connects with the Queensland Gas Pipeline, which runs from Wallumbilla to Rockhampton (via Gladstone).
It originally supplied the Brisbane area with gas from Surat Basin fields close to Roma. Natural gas is sourced from the Cooper/Eromanga Basin via the South West Queensland Pipeline. In 2001 and 2002 the pipeline was extended to enable coal seam methane from the Peat and Scotia gas fields to be supplied into south-east Queensland, via the Peat Lateral. This allows Wallumbilla to be a hub for a number of gas sources.
The pipeline was originally owned and operated by Associated Pipelines Limited and later AGL. AGL divested its pipelines via the float of Australian Pipeline Trust in 2000. A subsidiary of APT, APT Petroleum Pipelines Limited is the entity that owns the RBP. In 2001 APTPPL bought the 15 per cent ownership stake held by Interstate Pipelines Limited, resulting in it gaining full ownership.
An access arrangement includes tariff and non tariff elements. Up to this review, the Queensland Government had approved the reference tariff that would apply up to a capacity of 101TJ/day, with additional capacity offered as a negotiated service at a negotiated tariff. The ACCC was not previously able to review the reference tariff under the Queensland Government derogation.
The ACCC is proposing that 22 amendments be made to the submitted access arrangement in order for it to be approved. Most of these amendments relate to terms and conditions of access to the pipeline. The ACCC has also proposed a starting tariff 10 per cent less than APTPPL submitted. The tariffs consist of a fixed capacity charge and a volume through put component:
Capacity reference tariff = $0.3819 per Gigajoule of Maximum Daily Quantity
Throughput reference tariff = $0.0255 per Gigajoule
The main gas users have historically been large industrial customers, but usage by gas fired electricity generators is expected to increase, and more domestic customers may be added through extension proposals. The Queensland Minister for Energy, Mr John Mickel recently requested the Energy Competition Committee, chaired by Mr Darryl Somerville, to investigate the possible duplication of the Brisbane section of the pipeline as part of a range of strategies to increase competition and investment in the Queensland gas market.
**The ACCC is being assisted in this review by the Australian Energy Regulator, a constituent part of the ACCC. The AER is expected to assume full responsibility for reviewing and assessing gas transmission and distribution functions under the gas code in 2007.
