The Australian Competition and Consumer Commission today issued a draft decision approving a significant gas transmission investment in Victoria. The draft decision ensures that GasNet Australia has investment certainty and that Victorian gas users benefit from increased security of gas supply.
The ACCC's draft decision is to approve $62.5 million ($2005) as prudent costs for the construction of the Corio Loop.
"It is in the interest of all users of the gas system to ensure that adequate funding is provided in a timely manner to address system capacity and reliability issues when they are identified", ACCC Commissioner, Mr Ed Willett, said.
"VENCorp has forecast the need for this project pursuant to its system planner role for the gas industry in Victoria".
The investment provides system-wide benefits to all users through:
- addressing impending network constraints through increasing system capacity
- providing extra supply insurance in the event that there is an outage affecting flows into the system (i.e. such as occurred in the 1998 Longford gas explosion), and
- competition benefits due to stronger flows of gas from the Otway Basin.
"The Corio Loop provides the potential for increased competition in Victoria through increasing gas flow capability from the Otway basin fields to the west of Melbourne to compete with the currently much larger flow of gas coming from the Gippsland basin fields to the east of Melbourne", he said.
The ACCC invites submissions from interested parties on its draft decision by 28 April 2006.
The ACCC is currently the regulator of the Victorian transmission network under the national gas code. However, it is anticipated that from January 2007 this function will pass to the Australian Energy Regulator. In making this draft decision, the ACCC has been assisted by AER advice.
The ACCC's draft decision document is available on the AER website or by contacting the Networks Regulation South Branch Administrative Officer on (03) 9290 1436.