Regulator talks on gas access

IN an attempt to offer greater clarity with regard to gas pipeline access and associated issues, the Office of Gas Access Regulation (OffGAR) is preparing an information paper on rates of return for WA pipelines. The office hopes to release this for public comment next month.

Gas pipelines access regulation in WA under the Gas Pipelines Access (WA) Act 1998 was complex and time-consuming, OffGAR told National Energy Conference delegates in Sydney recently.

The act reflected the view that services such as gas access should not be open to excessive monopoly prices, OffGAR executive director Peter Kolf said.

Hence, a pipeline only comes under regulation when it is demonstrated it would be uneconomic to duplicate that line, deeming it not subject to normal market forces.

But determining the value of a pipeline under regulation, and a rate of return, was a sensitive issue, with different modelling techniques and involving the balancing of competing interests.

An acceptable outcome was one that promoted competition, encouraged economic development, provided value to users of pipelines and gas and also ensured a reasonable rate of return to the service provider.

Under the 1998 act three access arrangements have been approved, but two decisions – for Epic Energy’s Dampier to Bunbury Natural Gas Pipeline and the consortium-owned Goldfields Gas Pipeline – remain the subject of legal challenges.

The information paper aims to offer greater clarity to those submitting access arrangements and to outline the issues for regulators.

Mr Kolf said that differing interpretations of the gas access code were a source of delays and disputes, and that parties most affected by an access decision would be the ones to test a new code in detail.

Litigation could be necessary and helpful, Mr Kolf said, whenever the interpretation of phrases containing the word ‘normally’ came into dispute and required specific determination.

Quality information and effective communication were critical in reaching agreeable access determinations between the regulator and all affected parties, and also among the affected parties separately.

In WA the industry was very articulate and aware, and everyone understood the issues, with public processes and comprehensive in-formation available on websites, Mr Kolf said.

“I am not aware of any area of discussion where parties have misunderstood the situation,” he said.

Despite flexibility within the code, the regulator needed to take care with the code, to minimise and to mitigate conflict.

The Kambalda lateral, between Kalgoorlie and Kambalda, was one example of the code’s flexibility.

Its owner, Southern Cross Pipelines Australia, put a case that the pipeline was comparatively very small and, as no third party had been seeking access, the company wished to avoid the effort and expense of submitting and access arrangement to the regulator.

Under the code the company was granted a leeway of a few years, but when a third party requiring access did, at first, experience difficulty negotiating an acceptable deal, application was made for the extension to be revoked.

This would have been effected, except for the fact that both parties were able to achieve a commercial arrangement in the meantime and went back to the regulator to testify no access arrangement was needed.

A Supreme Court decision on

Epic Energy’s challenge against OffGAR’s draft tariff decision is expected within two weeks.