Market Review: Open

Overview

This review makes recommendations to help gas pipeline users negotiate lower prices and better deals under Parts 8 to 12 of the National Gas Rules. Changing the way gas pipelines are regulated will make it cheaper and easier to move gas around the market. This helps keep gas and electricity prices as low as possible.
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This review makes recommendations to help gas pipeline users negotiate lower prices and better deals under Parts 8 to 12 of the National Gas Rules. Changing the way gas pipelines are regulated will make it cheaper and easier to move gas around the market. This helps keep gas and electricity prices as low as possible.

Draft report

On 27 February 2018 the AEMC published a draft report for the review into the regulation of covered pipelines. The draft report includes draft recommendations for the economic regulation framework for full and light regulation (covered) pipelines. These recommendations include:

  • a revised approach to determining reference services that is expected to lead to the specification of additional reference services in an access arrangement in consultation with stakeholders
  • strengthening the information reporting obligations on light regulation pipelines
  • a clearer arbitration process and framework for making access determinations to enhance the credibility of the threat of arbitration
  • more efficient reference tariff and non-tariff terms and conditions for access to pipeline reference services
  • coverage of all expansions of light and full regulation pipelines
  • the opportunity for greater stakeholder engagement in all regulatory processes to support more informed decision making
  • the removal of the limited regulatory discretion framework to clarify the basis for all regulatory decisions.

The draft report also considers the governance and process that determines the form of regulation that applies to a pipeline. It notes the risk that it may now be difficult to apply full regulation to a pipeline where this outcome has become appropriate, and seeks stakeholder views on this issue.

If implemented in full, the package of draft recommendations will help pipeline users negotiate lower prices and better terms for their gas transportation agreements. A broader range of services will be subject to access arrangements, prices will be set at more efficient levels, contract terms will be more balanced, and arbitration will act as a more credible back-stop if negotiations fail.

Stakeholder submissions on the draft report closed on 27 March 2018. Copies can be found below.

Background

On 5 May 2017 the AEMC received from COAG Energy Council terms of reference to review the scope of economic regulation applied to covered gas pipelines. The review covers Parts 8 to 12 of the National Gas Rules (NGR) which set out how covered gas transmission and distribution pipelines are regulated. These parts include rules on the access arrangement process, information disclosure, revenue and price calculations, access terms and conditions, and an arbitration framework.

In conducting the review, the AEMC will recommend any amendments that it considers will address the Australian Competition & Consumer Commission’s (ACCC) 2016 finding that fully regulated pipelines may be able to exercise market power to the detriment of consumers and economic efficiency.

In assessing the current framework and any potential amendments, the Commission will be guided by the national gas objective (NGO). While the review will focus on transmission pipelines, it will also consider the implications of any recommendations on distribution pipelines.

The AEMC published an issues paper on 27 June 2017. The issues paper aimed to facilitate public consultation on the policy objectives of the gas access regime, in addition to the purpose and operation of the current regulatory framework in relation to the economic regulation of covered gas transmission and distribution pipelines.

The AEMC held an all-day workshop at the AEMC office in Sydney on 14 December 2017. Workshop participants discussed potential recommendations to key issues. Workshop documents are posted on this page.

On 31 October 2017 the Commission published an interim report for the review into the effectiveness of regulation of covered gas pipelines.

The interim report summarised stakeholder submissions to the issues paper and identified the issues that would be considered by the Commission in the draft report.

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Documentation