Gas Pipeline Information Disclosure and Arbitration Framework - Initial National Gas Rules

Date: 
Wednesday, 02nd August 2017

Following public consultation on the draft initial National Gas Rules (NGR), the Gas Market Reform Group (GMRG) developed the final initial rules implementing the final design of the information disclosure and arbitration framework. In accordance with the COAG Energy Council’s direction that the framework commence by 1 August 2017, the initial rules were agreed by Energy Ministers out-of-session in late July 2017.

On 1 August 2017, the initial rules were made by the South Australian Minister for Mineral Resources and Energy. Future amendments to the rules will proceed under the regular Australian Energy Market Commission (AEMC) rule making framework.

An explanatory note has been developed to assist stakeholders understand the final initial rules, including the GMRG’s response to key areas of stakeholder feedback.

Background

On 19 August 2016, the COAG Energy Council directed the Independent Chair of the Gas Market Reform Group (GMRG), Dr Michael Vertigan AC, to examine the current regulatory test for the regulation of gas pipelines, in consultation with stakeholders, and provide recommendations on any further actions to the Energy Council.

Dr Vertigan undertook the Examination of the current test for the regulation of gas pipelines (Examination) between August and December 2016 and found that the principal problem is that shippers seeking access to pipeline services have unequal levels of bargaining power and access to information. Accordingly, the Examination recommended that:

  1. The disclosure and transparency of pipeline service pricing and contract terms and conditions be enhanced, including requiring the provision of information on the full range of pipeline services which are available or sought.
  2. A framework for binding arbitration, available to all open access pipelines in the event parties are unable to reach a commercial agreement, be introduced into the National Gas Law (NGL).

On 14 December 2016, the COAG Energy Council endorsed these recommendations and asked Dr Vertigan to bring forward his detailed design work to enable the new framework to commence on 1 May 2017.

Council officials commenced drafting an amendment to the NGL in late 2016 and a draft of the National Gas (South Australia) (Pipelines Access-Arbitration) Amendment Bill 2017 was released for public consultation on 25 January 2017. The draft Amendment Bill was agreed by Council on 17 February 2017 and tabled in the South Australian Parliament on 29 March 2017. The Amendment Bill passed the South Australian House of Assembly on 17 May 2017 and the South Australian Legislative Council on 20 June 2017. The Act was proclaimed on 1 August 2017 and became operational on proclamation.  

The Act establishes the information disclosure and arbitration framework within the NGL and provides for the detail associated with the framework to be established in the NGR.

The GMRG’s work on the detailed design of the information disclosure and arbitration framework commenced in early 2017. On 21 March 2017 an Implementation Options Paper was published, which identified a number of options for the information disclosure requirements, the arbitration mechanism and principles to guide the arbitrator’s decision making. Stakeholder submissions were invited by Thursday 13 April 2017 and public submissions received can be accessed below.

  • Read the Options Paper and stakeholder submissions

    Stakeholders were also invited to attend a series of industry roundtable discussions. The roundtables were attended by 24 organisations with interests in non-scheme pipelines, upstream production, retailing, generation and industrial gas use. Feedback on the design of the new framework was also provided through extensive bilateral discussions with stakeholders.

    On Friday 2nd June 2017, the COAG Energy Council’s Senior Committee of Officials (SCO) considered the GMRG’s final recommendations on the design of the information disclosure and arbitration framework for non-scheme pipelines and agreed that the GMRG should proceed with developing the draft initial NGR to implement that design.

Following public consultation on the draft initial rules, the GMRG developed the final initial rules, which were agreed by the COAG Energy Council out-of-session in late July 2017.