Significant reforms to the natural gas sector have been underway for the past few years, with the broad objective to accelerate the development of a reliable, competitive and secure natural gas market. The reforms aim to encourage transparency, new market entrants, investment in gas infrastructure, and to provide a market mechanism to assist in managing supply and demand interruptions. The reforms are also progressing national consistency and closer alignment with electricity sector regulation.
Australia regulates natural gas transmission and distribution pipelines to enable third party access on fair and reasonable terms. Regulation is through the National Gas Law (NGL) and National Gas Rules (NGR), which facilitate third party access and promote efficient gas pipeline investment. They are enforced by the Australian Energy Regulator (AER), a national, independent government body. The NGL and NGR commenced on 1 July 2008 in all states except Western Australia, which is expected to adopt the NGL and NGR in the near future.
Pipelines assessed to have significant market power are classed as "covered" pipelines. Under the NGL and NGR, covered pipeline owners must submit an access arrangement containing gas transportation tariffs and access terms and conditions. This access arrangement must be then approved by the AER.
The NGL and NGR also contain incentives to promote gas pipeline investment, including:
- greenfield incentives that exempt qualifying pipelines from regulation for 15 years;
- light (non-price) regulation for qualifying pipelines;
- an improved competitive tendering process to assist local councils to bring gas to regions not connected to the gas network; and
- new capital investment criteria to facilitate the recovery of efficient costs in expanding existing pipelines.
Australia has a number of other initiatives to promote gas market development, as part of its ongoing energy market reform. One of these is the Natural Gas Services Bulletin Board, which commenced on 1 July 2008. The Bulletin Board provides transparency to gas markets by publishing daily transmission pipeline information, such as pipeline capacities and gas deliveries, on the Bulletin Board website at: www.gasbb.com.au
Other gas market development initiatives include:
- Creation of a gas Short Term Trading Market, initially in Sydney and Adelaide, expected to commence in 2010; and
- Publication of a Gas Statement of Opportunities. This will be an annual publication to assist gas market participants and potential new entrants to identify infrastructure investment opportunities and manage their market positions. It will provide a 10 year outlook of demand forecasts and supply capabilities and will highlight where potential reserve shortfalls and production and transmission constraints may occur in the future.
For further information contact:
Manager, Gas Market Development
National Energy Market Branch
Energy and Environment Division
Department of Resources, Energy and Tourism
GPO BOX 1564
CANBERRA ACT 2601
AUSTRALIA
Telephone: +61 2 6213 7383
Facsimile: +61 2 6213 6168
Information on gas pipeline access and energy market reform is available from the following websites at; www.ret.gov.au and www.mce.gov.au