Epic battle continues despite court ruling
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Tuesday, 27 August, 2002 - 22:00
NATURAL gas customers in Perth and the State’s South West are none the wiser as to what tariffs they will be paying following a WA Supreme Court ruling last week.
The court’s determination was made on action brought by Dampier to Bunbury Natural Gas Pipeline owner Epic Energy against the State’s Independent Gas Pipelines access regulator, Ken Michael.
However, vindication and positives have been claimed by those involved, as well as industry on-lookers.
For Epic, the decision has con-sequences reaching beyond WA’s borders.
The company, which owns 4,000 kilometres of gas pipelines in Australia and operates a further 890 kilometres of pipelines, is arguing a similar case on a different pipeline before the Australian Competition Tribunal.
Earlier this month the ACCC approved its own final access arrangements under the Third Party National Access Code for Epic’s Moomba to Adelaide pipeline system.
Under the processes of the code, Epic had to let the ACCC draft and approve final arrangements after agreement could not be reached, in order to be eligible to file for a merits review.
Epic has now done this with the Australian Competition Tribunal, arguing for an expansion inclusion and claiming misapplication of the code in areas including the pipeline’s value and an appropriate rate of return.
“But the main game was on Fri-day,” Epic general manager David Williams said. “The tribunal will have to take into account that decision.”
The WA judgment did not cancel the regulator’s draft decision on the tariffs Epic could charge, but said the decision was based on a flawed interpretation of the National Third Party Access Code.
The full court also determined Dr Michael’s process “afforded procedural fairness” to Epic, but called for further consideration of the fact that Epic had purchased the pipeline before the introduction of the code.
This, it said, had ramifications for determining the value of the pipeline.
Discussions between Epic and Dr Michael’s office towards a final tariff determination will now continue, with the added input of the independent direction and greater clarity of the 100-page full-court decision.
The detail of the judgment gives some clarification to the regulator’s office, OFFGAR.
OFFGAR executive director Peter Kolf said the decision was a very positive one and particularly helpful in its indication on how to interpret sections of the code.
The regulator would soon publish an information paper for public consultation regarding what had happened since the draft decision.
Applicants and other parties could make further submissions and no final decision on tariffs would be handed down until following this, Mr Kolf said.
However, reaching a decision was a matter of priority, and OFFGAR’s drafting and legal team, would continue the “considerable discussions with all parties” that have been ongoing throughout the process.
But while the court judged the regulator should take into account the legitimate business interests of a pipeline owner, this remained open to interpretation, Mr Kolf said.
“Weightings placed on elements of this are still the domain of the regulator, but will be made in con-sideration with the submissions of all parties,” he said.
Meanwhile Epic has continued to talk expansion plans.
“We continue to talk because we want to develop, we want to expand,” Epic chief executive Sue Ortenstone said.
The company is keen to get on with this next stage in WA.
“We’re continuing as a developer in other parts of Australia, but because of this particular situation in WA, we are at a standstill on development,” Mr Williams said.
Epic paid the Court Government $2.4 billion for the 1,530-kilometre DBNGP in 1998.
It submitted tariff charges of $1.00 per gigajoule for gas delivered to Perth and $1.08 for each gigagoule south of Perth, but the regulator’s draft set prices at $0.75 and $0.89, respectively.
Ninety per cent of the gas coming down the DBNGP supplies Alcoa, AlintaGas and Western Power.
Last year, Goldfields Gas Trans-mission issued writs against the State Government and the gas access regulator over a draft tariff decision for the Goldfields Gas Pipeline.
GGT general manager David King said there were some similarities with the Epic case, although the act-ion was brought in conjunction with the Goldfields Gas Pipeline Agreement Act (1994) and the Gas Pipelines Access (Western Australia) Act 1998.
The court’s determination was made on action brought by Dampier to Bunbury Natural Gas Pipeline owner Epic Energy against the State’s Independent Gas Pipelines access regulator, Ken Michael.
However, vindication and positives have been claimed by those involved, as well as industry on-lookers.
For Epic, the decision has con-sequences reaching beyond WA’s borders.
The company, which owns 4,000 kilometres of gas pipelines in Australia and operates a further 890 kilometres of pipelines, is arguing a similar case on a different pipeline before the Australian Competition Tribunal.
Earlier this month the ACCC approved its own final access arrangements under the Third Party National Access Code for Epic’s Moomba to Adelaide pipeline system.
Under the processes of the code, Epic had to let the ACCC draft and approve final arrangements after agreement could not be reached, in order to be eligible to file for a merits review.
Epic has now done this with the Australian Competition Tribunal, arguing for an expansion inclusion and claiming misapplication of the code in areas including the pipeline’s value and an appropriate rate of return.
“But the main game was on Fri-day,” Epic general manager David Williams said. “The tribunal will have to take into account that decision.”
The WA judgment did not cancel the regulator’s draft decision on the tariffs Epic could charge, but said the decision was based on a flawed interpretation of the National Third Party Access Code.
The full court also determined Dr Michael’s process “afforded procedural fairness” to Epic, but called for further consideration of the fact that Epic had purchased the pipeline before the introduction of the code.
This, it said, had ramifications for determining the value of the pipeline.
Discussions between Epic and Dr Michael’s office towards a final tariff determination will now continue, with the added input of the independent direction and greater clarity of the 100-page full-court decision.
The detail of the judgment gives some clarification to the regulator’s office, OFFGAR.
OFFGAR executive director Peter Kolf said the decision was a very positive one and particularly helpful in its indication on how to interpret sections of the code.
The regulator would soon publish an information paper for public consultation regarding what had happened since the draft decision.
Applicants and other parties could make further submissions and no final decision on tariffs would be handed down until following this, Mr Kolf said.
However, reaching a decision was a matter of priority, and OFFGAR’s drafting and legal team, would continue the “considerable discussions with all parties” that have been ongoing throughout the process.
But while the court judged the regulator should take into account the legitimate business interests of a pipeline owner, this remained open to interpretation, Mr Kolf said.
“Weightings placed on elements of this are still the domain of the regulator, but will be made in con-sideration with the submissions of all parties,” he said.
Meanwhile Epic has continued to talk expansion plans.
“We continue to talk because we want to develop, we want to expand,” Epic chief executive Sue Ortenstone said.
The company is keen to get on with this next stage in WA.
“We’re continuing as a developer in other parts of Australia, but because of this particular situation in WA, we are at a standstill on development,” Mr Williams said.
Epic paid the Court Government $2.4 billion for the 1,530-kilometre DBNGP in 1998.
It submitted tariff charges of $1.00 per gigajoule for gas delivered to Perth and $1.08 for each gigagoule south of Perth, but the regulator’s draft set prices at $0.75 and $0.89, respectively.
Ninety per cent of the gas coming down the DBNGP supplies Alcoa, AlintaGas and Western Power.
Last year, Goldfields Gas Trans-mission issued writs against the State Government and the gas access regulator over a draft tariff decision for the Goldfields Gas Pipeline.
GGT general manager David King said there were some similarities with the Epic case, although the act-ion was brought in conjunction with the Goldfields Gas Pipeline Agreement Act (1994) and the Gas Pipelines Access (Western Australia) Act 1998.