Regulating gas pipelines
The National Gas Law (NGL) and National Gas Rules (NGR) provide a framework for the regulation of gas pipeline services.
Parts 8 to 12 of the NGR
The Australian Energy Regulator (AER) regulates pipeline services in all jurisdictions except Western Australia where the Economic Regulation Authority holds this responsibility.
Based on an assessment of whether access to a pipeline would promote a material increase in competition in another market, the National Competition Council recommends whether a pipeline should be regulated (referred to as ‘covered’) under Part 8 to 12 of the NGR. This recommendation is considered by the jurisdictional minister who makes the decision.
In addition, covered pipelines have two forms of regulation available to them. The NCC decides which form – full or light – is relevant to the pipeline having regard to the market power of the pipeline and the costs and benefits of regulation.
For a fully regulated pipeline, the pipeline operator has to prepare an access arrangement for the regulator to approve. The access arrangement:
- includes price and non-price terms and conditions for third parties to gain access to the pipeline
- provides a starting point for parties to negotiate access on commercial terms.
For a light regulation pipeline, a more limited access arrangement can be lodged where the pipeline operator determines its own tariffs. Alternatively, the pipeline operator can publish information, as specified by the NGR, on its website.
In the event of a dispute between the pipeline operator and a user or potential user, the National Gas Rules contain a dispute resolution mechanism (arbitration). This is available in relation to all services on full and light regulation pipelines.
You can find more information about how the AER regulates pipeline services on the AER's State of the Energy Market reports page.
Part 23 of the NGR
On 1 August 2017 a new negotiate-arbitrate access regime was introduced into the National Gas Rules. This new access regime sits beside the original regime. Under the new Part 23 of the NGR, those pipelines that are not classified as ‘covered’ will be required to comply with the information provision requirements specified in this part. Part 23 also includes an arbitration framework for users of these pipelines to resolve disputes with pipeline operators.
Pipelines under Part 23 of the NGR are able to seek exemption from some requirements. The regulator is able to grant three types of exemption:
- Pipelines that do not provide third party access can be exempted from all (information and arbitration) provisions set out in Part 23 of the NGR.
- Pipelines that are single shipper pipelines can be exempt from all the information disclosure requirements.
- Pipelines with a daily capacity of less than 10 terajoules can be exempt from certain information disclosure requirements
Information on the regulatory history and key decisions made about pipelines can be found on the AEMC’s gas scheme register.