Rule Change: Completed

Overview

The AEMC has amended the definition of reference services to provide regulators with greater flexibility in determining the appropriate regulatory treatment of gas pipeline services. The final rule will allow prices for regulated services to be set at levels that are more efficient and cost reflective. This will encourage pipeline service providers to make efficient investment decisions and to operate pipelines more efficiently. This in turn will mean that pipeline users, and ultimately gas consumers should pay only for services that they use.
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<p>
On 1 November 2012, the AEMC published a final rule determination and final rule for the reference service and rebateable service definitions rule change request.</p>
<p>
The final rule differs from the rule proposed by the Australian Energy Regulator (AER) in that it makes changes only to the reference service definition. It provides the regulator some discretion in deciding which pipeline services that are sought by a significant part of the market should be classified as reference services.</p>
<p>
The final rule does not amend the current rebateable service definition.</p>
<p>
The final rule applies to all gas pipelines that are subject to full regulation by the AER or the Economic Regulatory Authority of Western Australia and will commence on 2 May 2013.</p>
<p>
<em>Section 320 of the NGL</em></p>
<p>
On 1 November 2012, the AEMC also published a short report setting out the reasons why the reference service and rebateable service definitions rule change request was not finalised within 12 months of formal commencement of the rule change process. The Commission is required to publish such a report under s.&nbsp;320 of the National Gas Law (NGL).</p>
<p>
The final rule determination has not been made within 12 months of the publication of the notice under s. 303 of the NGL as a result of:</p>
<ul>
<li>
the detailed and complex nature of the rule change request; and</li>
<li>
the nature and volume of issues raised by stakeholders during the first, second and third rounds of consultation on the rule change request.</li>
</ul>
<p>
Further detail on the reasons is provided within the s. 320 report.</p>
<p>
<strong>Background</strong></p>
<p>
On 5 August 2011, the AER submitted a rule change request to the AEMC. It sought to amend the definitions of reference service and rebateable service in the National Gas Rules (NGR).</p>
<p>
On 6 October 2011, the AEMC published a notice under s. 303 of the NGL of the commencement of consultation on the rule change request. This was accompanied by a consultation paper.</p>
<p>
Submissions on the consultation paper closed on 3 November 2011. Eight submissions were received as part of the first round of consultation.</p>
<p>
On 22 December 2011, the AEMC gave notice under s. 317 of the NGL to extend the publication of the draft rule determination by three months. This was to allow time for the Commission to consider a number of complex issues that were raised in the first round of submissions.</p>
<p>
On 15 March 2012, the AEMC published the draft determination on the AER&rsquo;s rule change request. The draft determination proposed a draft rule which was a more preferable rule to the AER&rsquo;s proposed rule. The draft rule differed from the proposed rule in that it made changes only to the reference service definition. It did not amend the rebateable service definition.</p>
<p>
Submissions on the draft rule determination closed on 26 April 2012. Six submissions and four supplementary submissions were received as part of the second round of consultation. A number of these submissions were late submissions.</p>
<p>
On 7 June 2012, the AEMC gave notice under s. 317 of the NGL that it had extended the period of time for making the final rule determination until 26 July 2012. On 26 July 2012, a further notice was published extending the time period to 1 November 2012. On both occasions, the Commission considered that submissions in response to the draft determination (including late submissions) raised issues of sufficient complexity and difficulty such that additional time was necessary.</p>
<p>
On 13 September 2012, the AEMC published a further consultation paper. In this consultation paper the Commission sought stakeholder comment on a proposed variation of the draft rule. This was an amendment to the rebateable service definition that only would apply to pipeline services provided by means of the Victorian declared transmission system. Submissions on the consultation paper closed on 5 October 2012. Six submissions were received as part of the third and final round of consultation.</p>

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