Rule Change: Open

Overview

This rule change request from Environmental Justice Australia and the Institute for Energy Economics and Financial Analysis seeks to revoke a derogation in the National Gas Rules which exempts the Northern Gas Pipeline (NGP) from application of the framework for arbitration and information disclosure for non-scheme pipelines (Part 23). The NGP is owned and operated by Jemena.
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This rule change request from Environmental Justice Australia and the Institute for Energy Economics and Financial Analysis seeks to revoke a derogation in the National Gas Rules which exempts the Northern Gas Pipeline (NGP) from application of the framework for arbitration and information disclosure for non-scheme pipelines (Part 23). The NGP is owned and operated by Jemena.

Draft Determination

On 21 February 2019 the AEMC published a draft rule determination to not make a draft rule to remove the derogation applicable to the NGP. 

The AEMC considers that that there is currently an appropriate level of protection to restrict Jemena’s ability to exercise market power. This protection is provided by the NGP access principles, the current market conditions and the threat of making the pipeline subject to either light or full regulation.

Revoking the derogation would lead to two arrangements, the Part 23 framework and the NGP access principles, concurrently applying to the NGP. This is likely to increase regulatory complexity and increase uncertainty for prospective users of the pipeline as well as Jemena. Concurrent application of the two regulatory regimes may also result in adverse outcomes such as forum shopping between the regimes by prospective users of the NGP.

There are special circumstances affecting the NGP in relation to the NGP’s tender process, the timing of the tender process with respect to development of the Part 23 framework, and the existence of a binding third access regime due to which a different regulatory regime for the NGP is acceptable. 

Stakeholder submissions on the draft determination are due by 4 April 2019.

Background

As part of the recent reforms to regulation of the gas market, a framework for arbitration and information disclosure was introduced for non-scheme pipelines. The framework came into effect with the introduction of Part 23 of the NGR on 1 August 2017. These initial rules made by the South Australian Minister to give effect to the framework included a derogation for the NGP.

On 18 July 2018 the AEMC received a rule change request from EJA and IEEFA that sought to revoke the derogation from the framework for arbitration and information disclosure applicable to the NGP.

On 15 November 2018 the AEMC published a consultation paper for the Northern Gas Pipeline – Derogation from Part 23 rule change request. The AEMC received 21 submissions which can be found below.

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Documentation