State delays planned gas reform

THE state government has delayed further consideration of one of its key energy policy reforms after industry players expressed concern about the cost and effectiveness of the proposed gas bulletin board.

The Independent Market Operator announced this week that the next round of consultation on the Gas Information Services project, including the bulletin board, had been delayed to early next year.

This is seen as a critical change, because it will enable the IMO and the industry to analyse the results of a cost-benefit study that was due to be completed this week.

Industry groups share in-principle support for the bulletin board, which is designed to improve the transparency and efficiency of the state’s gas market.

However, they were concerned the implementation process had gone awiy.

In a submission to the IMO, DomGas Alliance executive director Gavin Goh said some of the information to be collected for the bulletin board would deliver little or no practical benefits to market participants.

“It is not sufficient that information proposed to be collected will contribute to some vague notion that more transparency is always good,” the DomGas submission stated.

Verve Energy was also critical, saying the reforms should be low cost, have minimal impact on the operations of market participants, provide meaningful benefits, and reflect the unique nature of WAs gas market.

“Verve Energy is not convinced that the IMO’s proposed design meets this brief,” its submission concluded.

Verve estimated the GIS reforms would cost about $3.3 million to implement and more than $2 million to operate each year.

Alinta Energy had similar concerns, saying the design of the bulletin board had suffered ‘scope creep5.

“The level of detailed information for the GBB is onerous and unnecessarily adds to costs,” Alinta’s general manager WA government relations, Nenad Ninkov, stated.

Alinta estimated the GIS reforms would add between 50 cents and $1 to residential customers’ quarterly bills. Under the proposed reforms, the costs will be borne by the gas ‘shippers’, mainly Verve, Alinta and Alcoa.

Alcoa submitted that the government should pay half the set-up costs and a quarter of the operating costs, with the rest split between shippers and gas producers (such as Woodside and Apache).

The alumina producer also expressed disappointment at what it called the relatively superficial level of industry consultation.

It submitted that the reporting requirements were overly onerous, and argued that a simplified GIS would achieve the increased transparency all market participants were seeking.

Energy Minister Peter Collier announced the planned establishment of a gas bulletin board in December 2009.

It followed inquiries into two major gas supply disruptions in 2008, including the explosion at the Varanus Island gas plant.

The role of the bulletin board is to publish information on gas production, transmission, storage and demand.

The dominance of a handful of producers and shippers in the WA market has complicated the task.

Alinta said it was particularly concerned that individual gas-fired generators would have their confidential usage information publicly released, putting it at a competitive disadvantage to coal-fired generators.

Similarly, BP said it was very concerned that the IMO was proposing to publish the actual consumption data for individual Targe user’ facilities.

Conversely, APPEA, which represents gas producers, called for more information on Targe user’ facilities, but expressed serious concerns with the IMO’s intention to publish commercially sensitive information on gas re selves.

The IMO was originally due to release its second consultation draft on December 3.