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Gas regulation hits Moomba pipeline

The Australian Pipeline Trust (APA) has described yesterday's ACCC decision on tariffs for the Mo...

In its ruling the Australian Competition and Consumer Commission said it does not agree with all the terms and conditions of the access arrangement submitted by the owner of the MSP, APA subsidiary East Australia Pipeline Ltd (EAPL).

In particular, the ACCC did not agree with the tariffs EAPL proposed should be charged to transport gas through the MSP from Moomba to Sydney and several regional centres, such as, Lithgow and Wagga.

"EAPL is currently charging approximately 66 cents per gigajoule to ship gas from Moomba to Sydney", ACCC Chairman, Graeme Samuel, said. "The ACCC has determined that the starting tariff should be 52 cents (GST-exclusive)".

"Even though the ACCC has approved a lower tariff, EAPL's cash flows will not be affected in the short term", Samuel said. "This is because EAPL has a contractual arrangement with its main customer, AGL, under which AGL is required to make minimum monthly payments to EAPL regardless of the level of tariff".

While the ACCC broadly agrees with important aspects of EAPL's proposed access arrangement, such as proposed capital expenditure and volumes, the ACCC could not agree to EAPL's proposal for the value of the pipeline assets at $779 million or operating costs of $23 million per annum.

The ACCC concluded that the value should be $559 million and that $18 million per annum was a better estimate of the efficient costs of operating the pipeline.

APA managing director Jim McDonald said APA was currently absorbing the long and complex findings of the ACCC as well as considering the avenues open to it to contest the decision.

"This decision is less important in the scheme of things than the review of the Gas Access Code presently being undertaken by the Productivity Commission. We have made submissions to the Productivity Commission that address the undermining of confidence that such decisions produce for investors and financiers."

APA is also awaiting a decision from the Minister for Resources Ian Macfarlane on whether the MSP should be regulated at all given the fact The Eastern Gas Pipeline, which also brings gas to the same two markets as APA, is excluded from regulation under the Gas Access Code.

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