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Gas regulator under pressure

PRESSURE is mounting on WA’s gas access regulator, Ken Michael, to deliver a final decision on access arrangements for the Dampier to Bunbury Natural Gas Pipeline.

Letters to the regulator’s office, OFFGAR, indicate some concern and urgency in the lead-up to a decision anticipated this month, but now under formal extension for a further two months.

Epic Energy employees raised concerns last Friday over further delay on a final access arrangement.

In a letter to Premier Geoff Gallop, the employees said they did not think the WA Government was representing their interests or those of the community.

The employees told Dr Gallop: “We write to make you aware that more than 200 employees and our families are affected by the inability of the regulator to finalise a tariff decision.

“It is also very embarrassing to us, as Western Australians, how this ongoing saga is being perceived by potential corporate investors,” they continued.

An April 2 letter from the Office of Energy suggests clarification of gas specifications is one issue under consideration recently.

The office provided its preferred position on gas quality, emphasising it would “be considering the potential merits of continuing to maintain regulatory control over the DBNGP gas quality specifications”.

Deutsche Bank – an 11 per cent stakeholder in Epic, through one of its funds, and part of a syndicate of financiers for Epic’s purchase of the DBNGP – has also written to OFFGAR this month.

“Deutsche Bank believes it is important the final determination recognises the interests of equity and debt providers, to ensure that access to both foreign and domestic capital for the State of Western Australia is not impeded,” Deutsche chief executive officer Australia and NZ Chum Darvall wrote.

Former Labor MP Nick Catania has also put the reputation case, in addition stating a potential perception the Government and its agencies “have been exploited in AlintaGas efforts to take back an asset the Government explicitly desegregated”.

Earlier this month Energy Minister Eric Ripper had been hopeful a decision would have been released by the end of the month, but confirmed further delay could affect the State.

“Further delays in the capacity expansion of the DBNGP could limit the investment in gas-dependent industries in the South West of Western Australia,” Mr Ripper said.

“However large, highly gas intensive industries will tend to locate closer to the gas fields and will not be adversely affected by transmission constraints in the South West.”

Mr Ripper acknowledged the current situation was not helpful for those wanting to participate in Western Power’s power procurement process aimed at ensuring sufficient peaking and base load power.

“Uncertainty over the price and availability of gas transmission capacity on the DBNGP would not assist proponents of gas-fired generators,” he said.

Mr Ripper said the Government had sought to progress a final DBNGP access arrangement in making sub-missions as part of the public consultation processes, facilitating the provision of information to the regulator on the pipeline sale process and ensuring the regulator had the “necessary resources” to carry out his functions.

But the regulator’s final decision and the timing of this were governed by the Gas Access Code, he said.

Epic employees were told the premier was happy to listen to their concerns and would formally respond to their letter.

However, the Government respected the regulation process and would not be intervening, a premier’s spokesperson said.

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