We can’t regulate our way back to $3 per GJ: McCormack
APA Group CEO and Managing Director Mick McCormack has warned that hastily implemented gas pipeline regulations will not solve Australia’s energy problems.
Mr McCormack spoke at yesterday’s forum – ‘Meeting Australia’s energy needs’ – where he highlighted the fact that Australia is not in a gas supply crisis, but rather a gas price crisis.
With untapped reserves on the east coast, moratoriums from various state governments are stymieing new production, thereby tightening market supply and driving prices up.
The key to solving the crisis, according to Mr McCormack, is lifting blanket bans and assessing projects on a case by case basis, allowing project proponents to increase supply to meet market demand.
A key focus of Mr McCormack’s presentation was the over regulation of gas pipelines.
With the sector being subject to at least five major regulatory reviews by the ACCC over the past two years, Mr McCormack railed against “the misconception that we can regulate our way back to the good old days of $3 per GJ gas”.
While he emphasised the importance of regulations and reviews, he was sceptical of the effectiveness of the pressure that has been put on the pipelines industry with recent reviews.
“I have no issue with that at all and I look forward to hearing the ACCC’s findings following its review of the retail electricity market as much as the next Australian.
“What I do take issue with, is poor policy development based on conjecture and misinformation, and hastily put together to ensure the appearance of Government action, rather than a genuine commitment to developing policy that is in the long-term interests of consumers,” he said.
“Policy development processes have been truncated, submissions left unread, concerns not considered and Ministers making announcements on decisions prior to the close of consultation periods.
“Speed of implementation has become the driver, with traditional industry consultation and other governance processes designed for effective policy making left by the way side.
“Regulatory impact statements, impact modelling and cost benefit analysis all seem to have been side stepped when it comes to this round of energy regulatory reforms.
“Most remarkably, the pipeline industry found itself in the position this week of having to comply with an entirely new regulatory framework that commenced on Tuesday this week, which it only got to see in final form later that day.
“Given the uncertainty, we were forced to write to our customers to cut commercial negotiations short. Something neither we nor our customers wanted but we were forced to do. No winners there.”
Regulation being pushed through without substantial consideration is one issue, but Mr McCormack said that the key problem was that this regulation largely detracts from the real issue: Australia needs to produce more gas.
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