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Pipelines an easy target: APGA

17 July 2017 , , ,

The Australian Pipelines and Gas Association (APGA) is dismayed that Energy Ministers have brought forward reforms to pipeline operations and foreshadowed even more regulation in what is a small part of the energy sector without sufficient consideration of the consequences.

Without the coherent national energy policy Australia so desperately needs, the gas transmission pipeline sector remains vulnerable to the ad hoc decision making that continues to undermine the certainty needed for investment, according to APGA Chief Executive Peter Greenwood.

“Federal, State and Territory energy ministers meeting in Brisbane have agreed to implement information disclosure and commercial arbitration reforms on 1 August, a month ahead of what was already a very short development phase,” Mr Greenwood said.

“Consultation on the reforms doesn’t close until 20 July which leaves hardly any time for proper consideration of stakeholder views.

“And that is just one of a raft of reforms to pipeline operations that is being rushed through development, and now it seems that Council of Australian Governments (COAG) Energy Ministers are looking for further ways to tie the hands of gas transmission companies.

“Energy Ministers have also decided to allow the Australian Energy Market Operator (AEMO) to operate day-ahead auctions of gas pipeline capacity that is contracted but not required by the contractor.

“This imposes substantial new obligations and risks on pipeline operators and creates the awkward circumstance where AEMO will be paid to operate the auction and pipeline operators may be required to transport gas for free – a valid bid may have a price of zero cents.

“Importantly, it is clear any benefits from this new system are confined to the very few participants in the gas market who have the flexibility in supply or demand that would enable them to take advantage of these mandatory auctions.

“This contrasts with the proposed capacity trading platform which can increase competition in capacity markets and can be used by all market participants.

“This is merely the latest in a series of decisions on pipeline operations that have been introduced, or are in the process of being introduced, in a very compressed timeframe.

“Indeed, the various reforms being rushed through have significant potential to undermine each other.

“For example, the effectiveness of the proposed capacity trading platform that will enable shippers to trade spare capacity may be threatened by the day-ahead auctions.

“We understand the very difficult circumstances energy ministers have in trying to devise a coherent energy policy in a time of rapidly changing technology complicated by the transition to lower carbon emissions.

“However, tinkering with various elements of the system without any vision of what it should look like as a whole and then rushing through changes with insufficient time for sensible consideration of how they will work and what will be the cumulative impact of those decisions is a recipe for disaster.

“It promises to add to the uncertainty bedevilling future investment in the energy sector and, in the end, every energy consumer, and that is all of us, will pay the price.”