ACCC consents to variation of 2004 Dampier to Bunbury natural gas pipeline undertakings
The Australian Competition and Consumer Commission announced today that it has given consent to an application to vary undertakings accepted as a condition for approval of the acquisition of the Dampier to Bunbury Natural Gas Pipeline in 2004 by a consortium comprising Alinta, Alcoa and DUET.
The 2004 undertakings were intended to address the ACCC's competition concerns arising from the vertical integration of Alinta Limited, which held interests in the ownership and operation of the DBNGP and downstream interests in gas retailing and electricity generation. The ACCC was concerned that these vertical links would provide Alinta with the ability and incentive to discriminate in favour of its downstream businesses which were major shippers on the DBNGP.
Based on the results of its market inquiries and having regard to changes in circumstances since the 2004 undertakings were accepted, the ACCC concluded that the proposed variations would adequately address the competition concerns that were raised by the 2004 acquisition. As part of this decision, the ACCC agreed to vary non-discrimination clauses within the undertakings to permit the operator of the DBNGP to impose different tariffs or charges on shippers under the standard shipper contract. The variation permits the DBNGP operator to reach agreements with individual shippers in order to pass on a proportion of the increased price DBNGP (WA) Transmission Pty Ltd will pay for system use gas under its agreement with Alinta Sales Pty Ltd.
There are two types of agreements that the DBNGP operator may reach with shippers:
to charge a shipper a system use gas tariff, or
to reduce the charges payable by a shipper under the standard shipper contract in consideration for that shipper supplying its own share of system use gas to the DBNGP.
The variation permits both types of agreement provided that the tariff imposed or reduction of charges is not less favourable than that agreed with Alinta Sales Pty Ltd, Alinta Energy (LPG) Pty Ltd or a shipper that is an associate of Prime Infrastructure Holdings Limited.
Prime Infrastructure Holdings Limited was formerly known as Babcock and Brown Infrastructure. Alinta Energy Limited was formerly known as Babcock and Brown Power. In 2007, Babcock and Brown Infrastructure and Babcock and Brown Power, together with Singapore Power International Pte Ltd, acquired Alinta Limited. The 2007 undertaking of Babcock and Brown Infrastructure and Babcock and Brown Power was accepted by the ACCC in relation to its decision not to oppose this acquisition.
ACCC chairman Graeme Samuel said: "The ACCC considers that the variation to the non-discrimination clauses is consistent with the competition objectives of the undertakings, since the variation will ensure that no shipper pays a higher system use gas tariff, or enjoys a lesser reduction in system use gas charges, than Alinta Sales Pty Ltd, Alinta Energy (LPG) Pty Ltd or an associate of Prime Infrastructure."
The ACCC also consents to another variation to the 2004 undertaking to reflect changes in circumstances relating to the ownership and operation of the DBNGP. This variation includes the removal of Alinta Network Services Pty Ltd as a party to the undertaking, and the deletion of ring fencing clauses that are covered by the 2007 undertaking of Babcock and Brown Infrastructure and Babcock and Brown Power.
The ACCC is continuing to review the parties' applications to withdraw the 2004 and 2007 undertakings. The timeline for the ACCC’s review is currently suspended as the ACCC has requested further information from the parties. Information concerning this review is available on the ACCC's website, www.accc.gov.au.
