Regulation of covered gas pipelines draft determination

PIAC is broadly supportive of the recommendations contained in the draft determination, and agree that they are likely to represent an improvement to the transparency and efficiency in the operation of the economic regulatory framework for transmission and distribution pipelines.

PIAC reiterates our contention that all networks serving small customers should be subject to price regulation that ensures efficiently priced services.

We note that the draft determination does not address ongoing issues with the National Gas Law’s test for the application of regulation to pipelines. Accordingly, we request that the AEMC support and recommend strengthening the test for applying regulation to pipelines.

PIAC highlights two alternative approaches that would lead to more appropriate application of regulation so that all pipelines with market power can be regulated appropriately: 

1. The AEMC could promote the ACCC’s recommendation to amend the coverage criteria to explicitly address market power.
2. The potential reforms outlined on pages 43-45 of the Draft Report may be an appropriate means of addressing this risk