Economic Regulation

Gas transmission pipeline regulation
Australia has a national, industry specific access regime in place that governs third party access to natural gas pipeline systems. This national regime is contained within the National Gas Law ('NGL') and associated National Gas Rules 2008 ('NGR'). The NGL and NGR set out principles for third party access to natural gas transmission and distribution pipeline systems throughout Australia. The NGL and NGR outline the rights and obligations of pipeline owners and users in relation to 'covered' (i.e. regulated) pipelines and provide a mechanism for third parties to obtain access to covered pipelines within an independent regulatory framework, including referral to arbitration to resolve access disputes. The NGR aim to provide a degree of certainty regarding terms and conditions for access to the services of covered pipelines in the event of a dispute, while preserving the ability for parties to negotiate access on commercial terms. Key features of the NGL and NGR are discussed below.

The third party access rights and obligations of pipeline owners and users, as contained in the NGL and NGR, only apply to pipelines that are covered. Certain pipelines were automatically covered when the regime commenced and other pipelines may become covered if they meet certain criteria set out in the Gas Rules. Covered pipelines may also become 'uncovered' if they no longer meet those criteria.' Epic's gas pipelines were originally covered, but coverage was subsequently revoked.

Access Arrangements
Under the Gas Rules, the owner or operator of a covered pipeline must submit a compliant access arrangement ('Access Arrangement') to an independent regulator for approval. A full Access Arrangement must set out:

  • the terms and conditions of access to covered pipelines to which the Access Arrangement relates;
  • proposed pipeline services that are likely to be sought by a significant part of the market ('Reference Services');
  • tariffs for those Reference Services ('Reference Tariffs');
  • capacity trading requirements;
  • queuing requirements (if applicable) to determine user priorities for spare capacity;
  • how the pipeline is to be expanded or extended; and'
  • how access requests are to be dealt with.

A more limited Access Arrangement can be lodged for 'Light Regulation' pipelines.' The regulator undertakes a consultation process in deciding whether to approve a proposed Access Arrangement and may require amendments. Access Arrangements are subject to periodic revision.
The Australian Energy Regulator ('AER') regulates covered gas transmission pipelines in Australia (other than Western Australia, which has a state-based regulator).

Moomba to Adelaide Pipeline System
On 15 March 2005, Epic Energy filed an application with the National Competition Council (NCC) for revocation of coverage of the Moomba to Adelaide pipeline system. The NCC undertook a comprehensive public consultation process, consistent with its obligation. On 16 September 2007, the South Australian Minister for Energy, the Hon. Patrick Conlon MP, released his decision to revoke coverage of the MAPS. The revocation took effect from 1 October 2007.
As this pipeline is not covered, an Access Arrangement is not required.

South East Pipeline System
Coverage of the South East Pipeline System was revoked on 20 April 2000 following submission (on 3 December 1999) by Epic Energy of an application for revocation of coverage.' An Access Arrangement is not required for the SEPS.

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