ACCC approves access arrangement for Ballera to Mt Isa pipeline

The Australian Competition and Consumer Commission today issued its final approval on the terms and conditions of transportation services proposed by the Carpentaria Gas Pipeline Joint Venture for the Ballera to Mt Isa Gas Pipeline, also known as the Carpentaria Gas Pipeline.

The access arrangement describes the terms and conditions, including the maximum price (tariff) of transportation services, on which gas will be transported via the pipeline on behalf of third parties.

The ACCC had some concerns with the access arrangement as originally submitted and required revisions to the access arrangement before the ACCC would give approval.

A revised access arrangement that complies with the ACCC's requirements was submitted. Accordingly, the ACCC has approved the revised access arrangement.

Among other things, the ACCC required revisions to achieve the following outcomes:

• ensure that the provisions of the access arrangement are consistent with the Queensland legislation
• remove the potential for the joint venture to effectively change the non-tariff terms and conditions of the access arrangement, by changing its standard Access Agreement, without consulting the ACCC
• prospective users to be given the option of providing commercially sensitive information to an independent person rather than the joint venture under certain circumstances and
• the joint venture being required to specify major events that would trigger an early review of the those elements of the access arrangement that have not been approved by the Queensland Government.

In 1998 the Queensland Government passed legislation enabling it to approve the tariffs for transportation services for the four Queensland gas transmission pipelines.

This means that the service providers of those pipelines are not required to submit tariffs to the ACCC for approval.

The dates for the first review of the access arrangements are also determined by the Queensland Government. For this pipeline the first review is not due until May 2023.

As a result, in its assessment of joint venture 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 final approval document is available on the ACCC's website (see link below) or by contacting Ms Rebecca Khair on (02) 6243 1233.

Background

The Carpentaria Gas Pipeline transports gas from the fields in Ballera in South-West Queensland to Mount Isa in North-west Queensland. It was constructed in 1998 through a then AGL subsidiary, Roverton Pty Limited and is now owned by the Carpentaria Gas Pipeline Joint Venture, of which the Australian Pipeline Trust is a member.

The pipeline 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.

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 ACCC 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 Carpentaria Gas Pipeline 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. The arrangements that have been approved by the Queensland Government are referred to as 'derogations'. They 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.