As all would be aware, the Carbon Pollution Reduction Scheme (CPRS) has had an eventful year. Despite the rejection of the legislation for the second time in the Senate in December 2009, giving the Federal Government a trigger for a double-dissolution election, the Government has declared it will have one more attempt when Parliament sits again in February 2010.

The issue of CPRS cost pass-through on the gas transmission industry’s long-term contracts, which many entered into years ago when a carbon price was not a consideration, remains. The Government has indicated it is not willing to act on this until companies at least try to renegotiate contracts. Of course, negotiations cannot commence until there is legislation in place defining the exact obligations and costs to companies. It will be interesting to see where climate change policy goes in the near future as it is certain to remain in the spotlight for the first half of this year.

The Australian Government’s Energy White Paper, setting out its vision for durable policy directions to ensure Australia’s long-term economic prosperity and energy security in a low carbon future, has suffered due to the uncertainty surrounding the CPRS. Originally due to be delivered in December, work has essentially stalled since August and will not likely be finalised until issues surrounding the CPRS are resolved.

APIA has received indication that the Energy Green Paper (the prelude to the White Paper) will be released in February 2010.

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APIA had some concerns with the initial discussion papers put out by the Energy White Paper team, particularly in relation to the assumed convergence of electricity and gas markets. However, thanks to consistently questioning this assumption wherever it is seen, it seems that the Government has stepped back from this view.

One process that continued apace throughout 2009 was the Ministerial Council of Energy’s Harmonisation of Energy Network Safety and Technical Regulation. APIA is represented on the Industry Leaders Group that prepared a harmonisation plan, which was presented to the Ministerial Council in mid-December.

The plan sets out that the best way to ensure a harmonised regulatory approach across the country is to have strong, credible, risk-based standards for each sector of the energy network industry.

AS2885 was held to be the benchmark for other sectors and the electricity industry will be expected to develop an equivalent standard over the next few years. This is a great outcome for the gas transmission industry.

At the start of the harmonisation process there was a strong push to avoid national standards, with some, mainly from the electricity industry, arguing single national standards should not be mandated. Largely due to the efforts and positive experiences that the gas transmission industry was able to bring to the Leaders Group, a single national standard recommendation has prevailed. Jemena’s John van Weel, assisted by Ed de Prinse from APA Group and Ed Gaykema also from Jemena, are to be commended for their work on this issue.

A significant change to the energy market frameworks came about halfway through 2009 with the commencement of operations of the Australian Energy Market Operator (AEMO).

While the establishment of AEMO has not created a big change for the gas transmission industry just yet, there have been significant concerns around some of AEMO’s new information gathering powers. June 2010 will see the Short Term Trading Market begin in the Sydney and Adelaide gas markets, forcing considerable changes onto the pipelines servicing these areas.

As the Australian Government focuses on transforming the national economy into one with much lower carbon intensity, there will be a strong push to reform the energy sector. This is inevitable as the stationary energy sector is responsible for almost half of the nation’s emissions.

Natural gas is strongly positioned to play an increased role in the new economy and APIA will continue to ensure that the Government’s policies help natural gas and the gas transmission industry expand to reach its full potential.