The COAG Energy Council will test the impact of a number of recently introduced reforms to gas transmission pipelines.

APGA Chief Executive Officer Steve Davies said Changes ordered by the COAG Energy Council are still being developed and implemented, so a foreshadowed second wave of changes before the first round was bedded down could have spelled disaster.

“It’s refreshing to see that wise heads have prevailed,” Mr Davies said.

“Ministers have also decided to allow a reasonable timeframe for implementation of some of the reforms that are still in development.

“Some of the changes are complex and it will take time to see the full impact they have. Allowing time is a sensible move, and now policy-makers can turn their attention to the more intractable problems in the energy sector while the pipeline industry gets on with its part.”

Reforms under way include:

  • The new information disclosure and arbitration framework came into effect 1 August 2017. This provides transmission pipeline customers with improved information to judge the reasonableness of a pipeline’s proposed tariff and the ability to take a negotiation to arbitration if they are unsatisfied with the outcomes of commercial negotiation. This reform will put downward pressure on all pipeline services
  • Capacity trading and contract standardisation are under development. These reforms will assist existing capacity holders and interested parties in trading spare capacity in the secondary market. Increased liquidity in the secondary market puts downward pressure on firm tariffs as it places capacity holders and pipeline owners in direct competition selling spare capacity
  • Day-ahead auctions for contracted but unnominated capacity are under development. The auction will encourage capacity to holders to make capacity available to the secondary market, supporting the trading reform. It will also provide a low-cost option for access seekers to meet short-term transportation requirements, lowering the average cost of transportation for many users

The first reform applies to pipelines that are not subject to economic regulation. The second and third reforms apply to all pipelines.

A review of Parts eight to twelve of the National Gas Rules is also under way.

This will examine the treatment of pipelines that are subject to economic regulation and look for opportunities for improvement.

“These are four significant, inter-related reforms that are seeking to wring all possible savings from a part of the energy system that makes up a relatively small part of power bills for households and for industry,” Mr Davies said.

“Gas transmission pipelines are safe and efficient, and tariffs have not risen above CPI over the past decade.

“Energy consumers are desperate for some relief from the rising costs of their power bills.

“That will not be delivered by increasing regulation on transmission pipelines when the transportation is less than ten per cent of the retail gas price for residential and commercial customers and less than 20 per cent of the delivered gas price for major users including gas-fired power generators and industrials.

“The pipeline industry is doing its part and getting on with implementing the reforms as outlined above. Now Energy Ministers must turn their attention to the major problems in the energy sector if Australia is to have any chance of achieving a reliable and affordable energy supply with lower emissions.” 

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