Arbitration and transparency

Reform Measure 4 of the COAG Energy Council’s Gas Market Reform Package directed the Independent Chair of the Gas Market Reform Group (GMRG) 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, including potentially replacing the test.

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; and
  2. that a framework for binding arbitration 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.

The GMRG was responsible for developing the arbitration mechanism, pricing principles and information disclosure requirements that apply to unregulated pipelines.

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.

Further information on the work is available on the design and implementation pages and information on the application of the information disclosure and arbitration framework can be accessed on the Australian Energy Regulator’s website.