The Australian Competition and Consumer Commission today issued a draft decision on the proposal by GPU GasNet to roll-in its investment of $75.3 million in the Southwest Pipeline to the Victorian gas transmission system access arrangement.
"The ACCC agrees that some system security benefits and competition benefits arise from linking the Victorian principal transmission system with the underground storage facility at Iona and with Otway Basin gas fields", ACCC Chairman, Professor Allan Fels, said.
"However, the ACCC is not satisfied it has been provided with evidence of enough benefits to justify a higher reference tariff that would recover the full investment from all Victorian gas transmission customers. Under GPU GasNet's proposal, transmission tariffs would rise on average by 12.8 per cent in net present value terms for all gas transmission customers.
"A major issue for the ACCC is that system security benefits may be limited. As the underground storage facility operates on a commercial basis supplying peak load gas in winter, it may contain little, if any, reserves for much of the year".
The ACCC recommends that GPU GasNet submit a revised proposal as part of the 2002 review of its access arrangement when there will be firmer evidence of the likely use of the pipeline and its benefits.
GPU GasNet would continue to earn substantial revenue on the pipeline under existing contracts with the three foundation retailers.