ACCC draft determination on market and system operations rules to promote certainty in the Victorian gas industry

18 October 2002

The Australian Competition and Consumer Commission released a Draft Determination today proposing to grant authorisation* for 10 years to the Victorian Energy Networks Corporation (VENCorp), Victoria's independent gas and electricity systems operator, for the Market and System Operations Rules (the MSOR). The MSOR govern the operation of Victoria's gas transmission system, and provide for a spot market to trade gas.

"By approving the continuation of Victoria's current gas market arrangements, the proposed determination would give the Victorian gas industry certainty and stability", ACCC Chairman, Professor Allan Fels, said today.

"The ACCC accepts that, on balance, the MSOR have benefited the Victorian gas industry since the market commenced operation in 1999, and will continue to do so".

In its Draft Determination, the ACCC found that the MSOR, as a fundamental component of Victoria's market carriage system, has led to several public benefits, and that these are likely to continue. The MSOR's main benefit flows from their provision for a spot market that allows gas to be traded in a transparent manner. The spot market operates with minimal intervention by VENCorp, and gives open access to parties wishing to buy or sell gas.

The ACCC also believes the MSOR provide the basis for competition among retailers.

While the Draft Determination expressed some concerns over issues such as the representation of end-user interests in Victoria, and the current mechanisms in the MSOR for setting the price of gas, it found that overall the MSOR, and market carriage generally, confer a net public benefit. Accordingly, the Draft Determination proposes granting authorisation for a 10-year period.

This period of authorisation aims to provide industry stability, and avoids conflict with a Victorian statutory review of VENCorp that will occur by 2007. The authorisation period also reflects the ACCC's view that market carriage has operated effectively to date, and should be permitted to continue.

Release number: 
MR 252/02
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