The National Gas Code is the framework for the regulation of Australia's 75 000 kilometres of gas distribution networks (valued at around $6 billion) and most large gas transmission pipelines. The Code provides guidance on setting the terms and conditions of third party access to networks and pipelines, including the determining of default gas transportation tariffs for large gas users and companies retailing gas
The review has been welcomed by the Australian Gas Association (AGA), which said the collective recognition by State, Territory and Commonwealth governments of the need for the review is a positive first step to achieving an improved regulatory framework.
"It is crucial that the review incorporates the findings and recommendations of the Productivity Commission's Review of the National Access Regime and, to this end, the AGA endorses the Productivity Commission being given responsibility for carrying out the review," said AGA chief executive Bill Nagle.
"The AGA has argued for some time that the Commission is the most qualified and appropriate body to undertake the review, given the expertise it developed during its review of the wider access regime.
"The National Gas Code requires urgent review and significant amendments, to ensure it does not continue to deter investment in the development of Australia's gas network and, critically, ongoing re-investment in existing gas infrastructure. Currently, numerous proposals for new gas distribution networks and pipelines are being adversely impacted by the restrictive nature and application of the gas access regime.
"The Code could be improved through the incorporation of clear access pricing principles, to guide regulators in making decisions that better reflect the medium-term interests of the Australian community in having access to an expanding and reliable gas network," said Nagle.
"The review should also focus on ways to overcome the identified flaws in existing access pricing regulation by promoting simpler and more light-handed pricing approaches. These approaches should be consistent with the outcomes of a number of recent judicial decisions that have emphasised the costs and flaws of highly theoretical and unbalanced approaches to access pricing regulation.
"In addition, specific mechanisms to facilitate new investment in gas infrastructure, such as 'access holidays' recommended by the recent Council of Australian Governments Energy Market Review, should be finalised and implemented quickly."
