ACCC releases its final decision for the Wallumbilla to Brisbane Gas Pipeline

The Australian Competition and Consumer Commission today released its Final Decision on the terms and conditions of transportation services proposed by APT Petroleum Pipelines Limited (APTPPL) for the Wallumbilla to Brisbane Gas Pipeline, also known as the Roma to Brisbane Pipeline (RBP).

The terms and conditions of transportation services are set out in APTPPL’s proposed ‘access arrangement’. The access arrangement describes the terms and conditions, including the price of transportation services (tariffs), on which APTPPL will transport gas via the RBP on behalf of third parties.

In 1998 the Queensland Government passed legislation enabling it to approve the prices of transportation services for the four Queensland gas transmission pipelines. This means that the service providers of those pipelines are not required to submit prices to the ACCC for approval.

The dates for the first review of the access arrangements have also been determined by the Queensland Government. For the RBP the first review is due in July 2006.

As a result, in reaching its Final Decision the ACCC was unable to assess the price of transportation services and the review date, but was only able to assess the other elements of the proposed access arrangement.

The ACCC has decided not to approve the access arrangement as submitted by APTPPL. The Final Decision includes the amendments that APTPPL must make to the access arrangement in order for the ACCC to approve it.

Among other things, the amendments are intended to achieve the following outcomes:

• ensure that the provisions of the access arrangement are consistent with the Queensland legislation
• remove the potential for APTPPL to effectively change the terms and conditions of the access arrangement, by changing its standard Access Agreement, without consulting the ACCC
• all expansions are to be considered as part of the covered pipeline unless the ACCC agrees otherwise.

The Final Decision is available by contacting Ms Hema Berry on (02) 6243 1233.

Background

The Roma to Brisbane Pipeline (RBP) transports gas from the gas hub at Wallumbilla, near Roma, in south-east Queensland to markets along the pipeline route and to markets in Brisbane. APT Petroleum Pipelines Limited owns and operates the RBP.

The RBP is one of four gas transmission pipelines in Queensland for which the service providers are required to submit their proposed access arrangements to the ACCC for approval under the National Third Party Access Code for Natural Gas Pipeline Systems (the Code).

An access arrangement describes the terms and conditions, including the price of access (tariffs), on which the service provider will provide gas transportation services to third parties. An access arrangement also includes other elements such as the services policy, queuing policy, trading policy, extensions/expansions policy and the next review date of the access arrangement.

In the normal course of its assessment of an access arrangement the Commission would be required to review the tariffs proposed by the service provider. This would involve an assessment of the valuation of the pipeline assets, a reasonable rate of return on those assets, the depreciation methodology and operating costs.

However, in the case of the RBP and other Queensland gas transmission pipelines, some elements of the access arrangements have been approved by the Queensland Government, notably the tariffs and review dates. These arrangements that have been approved by the Queensland Government are referred to as ‘derogations’ and remove the obligation of the service providers to submit tariffs and review dates to the ACCC for approval.

Hence the ACCC has the power to review only those elements of the access arrangements that have not been determined by the Queensland Government.