Issues paper reviews Victorian gas access arrangements

The Australian Competition and Consumer Commission has released an issues paper on its review of the Victorian gas transmission access arrangements of GasNet and VENCorp.

ACCC Chairman, Professor Allan Fels, said that the ACCC approved these access arrangements in 1998 for the period up to the end of 2002 and that the ACCC is now assessing changes that GasNet and VENCorp propose to apply from 2003 to 2007.

"The proposals raise a number of issues that the ACCC will consider closely", he said. "Of major importance to Victorian natural gas customers is the tariffs that GasNet and VENCorp will charge for the next five years. GasNet is proposing a real increase of over 10 per cent. Mainly because of its investment in new facilities, GasNet's revenue is proposed to grow by a substantially larger factor. VENCorp is proposing reduced charges, however, these make up only about 15 per cent of the transportation charges on the Victorian gas transmission system.

"A major driver of GasNet's tariff increase is its proposal to 'reopen' its capital base. This would increase its 1 January 1998 value of $363.7 million by $35.8 million, mainly as a result of adding a value for easements. The ACCC will carefully consider the proposal and will consult with the pipeline industry and other interested parties".

Professor Fels said that the ACCC was requesting submissions on the proposals by 13 May 2002.

"The issues paper highlights a number of matters that gas users and other industry participants are invited to comment on to help inform the ACCC's review process. As well as the matters regarding the asset base, these parties can provide valuable comment on forecasts of demand, costs and revenues, on incentive mechanisms and on GasNet's proposed new tariff structure".