Speaking at the AGA's Gas Industry Forum in Melbourne today, Chief Executive, Bill Nagle, said the forthcoming review of the national gas access regime and National Gas Code is a "once in a decade opportunity to improve downstream gas economic regulation, to ensure it encourages and supports an expanding and reliable gas network."
"The AGA and its members have been preparing for this review for some time, and we have welcomed the Federal Government's recent statement that the Productivity Commission will conduct the review and report within twelve months" Mr Nagle said.
He added that the AGA also supported the recent proposal by the Ministerial Council on Energy to establish a national energy regulator, that would initially have responsibility for regulating the downstream electricity sector and may also, within twelve months of its establishment, be responsible for some elements of the gas sector.
However, he urged that "reviewing and reforming" the regulatory regime should be the first priority for policy-makers, rather than any finalisation of the national regulator's structure.
"We see the need to get the rule book right as a more important challenge than sorting out the final arrangements regarding a national regulatory body, important as that task is" Mr Nagle said.
"To the extent that a national energy regulator can bring a greater consistency and balance to access pricing decisions for regulated gas businesses, and lower compliance costs for downstream market participants and the emerging national retail market, the AGA welcomes this initiative.
"However, even though there is considerable scope for rationalising and simplifying regulatory governance arrangements in Australia, it is more balanced regulatory decisions and the rules of the access framework itself that are of critical significance in ensuring adequate investment in new and existing gas infrastructure.
"The national gas access regime 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. Seven proposed greenfield gas distribution projects-with estimated project values in excess of $390 million and serving nearly 500 000 potential gas consumers-have been deferred or shelved since 1999.
"The regime could be improved through the incorporation of clear access pricing principles in the National Gas Code, 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.
"The review must also focus on ways to overcome the identified flaws in existing access pricing regulation by promoting simpler and more light-handed pricing approaches.
"Additionally, specific mechanisms to facilitate new investment in gas infrastructure, such as 'access holidays' recommended by the Energy Market Review, should be finalised and implemented quickly."
Mr Nagle also emphasised that it was crucial the forthcoming review specifically consider regulatory measures to encourage and support the development of new gas distribution network extensions to regional areas.
"Historically, most of the greenfields extensions debate has centred on encouraging the development of long distance, high pressure pipelines" he said. "However, the issue is just as pressing for greenfields gas distribution systems, if we are to see the gas network extended-and the benefits of natural gas delivered-to more regional areas of Australia."
The National Gas Code provides the framework for the economic regulation of Australia's 75 000 kilometres of gas distribution networks (valued at around $6 billion), and most large gas transmission pipelines (up to 20 000 kilometres in total).
