The Australian Competition and Consumer Commission today issued a final decision approving a significant gas transmission investment in Victoria.
The ACCC's final decision is to approve $61.7 million ($2005) and an additional allowance for financing costs, as prudent costs for the construction of the Corio Loop.
ACCC Commissioner, Mr Ed Willett, said the decision ensures that GasNet Australia has investment certainty and that Victorian gas users benefit from increased security of gas supply.
"This decision provides significant investment certainty to GasNet Australia by the ACCC providing an up-front binding agreement that the approved costs of the Corio Loop can be recovered in future transmission tariffs.
"It is in the interest of all users of the gas system to ensure adequate funding is provided in a timely manner to address system capacity and reliability issues when they are identified.
"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", Mr Willett said.
The ACCC is currently the regulator of the Victorian transmission network under the national Gas Code. However, it is anticipated from January 2007 this function will pass to the Australian Energy Regulator. In making this final decision, the ACCC has been assisted by AER advice.
The ACCC's decision documents on this application for a new facilities investment are available on the Australian Energy Regulator website or by contacting the Network South Branch Administrative Officer on (03) 9290 1436.