Call for set energy policies

THOSE trying to do business in the industry know it, the Western Australian Government is taking a serious look at it and a timely PricewaterhouseCoopers report has publicly documented insider views of the nation’s energy arrangements.

The report underscores the concern of energy and utilities companies at what is termed “inconsistency over rules and processes surrounding key regulatory activities”, concluding that market players feel fettered by heavy regulation, government interference and the lack of a national energy policy.

It includes complaints by energy companies at a lack of liquidity in wholesale electricity and gas markets and calls for full retail contestability

PwC corporate finance energy and mining leader Jon Hubbard said the report, titled Different worlds: strategic drivers of Australia’s new energy industry, highlighted the need for a national policy and rationalisation of regulation.

The report complements and concurs with some of the concerns of Australian Petroleum Production and Exploration Association executive director, Barry Jones, who recently warned of the danger of a narrow and short-term focus on securing lower electricity prices for Australia’s two most populated States, NSW and Victoria.

Rather, Mr Jones called for gas industry representation in the process of developing a national energy policy and admonished energy policy makers to take note of Australia’s urgent need to promote the right fiscal and regulatory conditions for a viable gas exploration and development industry.

Australia needed to both sure up its reserves and encourage and support investment in national energy infrastructure well before an expected significant global decline in hydrocarbon reserves by 2010, Mr Jones said.

Pipeline owner Epic Energy is one company making statements about lack of investment incentives for gas infrastructure development.

Epic believes Australia is over-regulated in the area of rates of return on gas pipelines and is publicly expressing frustration at access and tariff arrangements in both Queensland and Western Australia.

Epic’s South West Queensland pipeline tariffs, agreed with the Queensland Government in 1995, are being challenged by the Australian Competition and Consumer Commission, while the company has itself challenged a draft decision this year by the WA Office of Gas Access Regulation, ruling against the Dampier to Bunbury natural gas pipeline tariffs that Epic maintains were agreed to by the Western Australian Government.

The ACCC Queensland decision may force Epic to re-open all its commercial contracts, whichwere initially agreed over a 20-year term.

Epic awaits a decision on the WA Supreme Court challenge, which concluded last week.

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