31 January 2001

Ms Kanwaljit Kaur 
Acting General Manager – Gas 
Australian Competition & Consumer Commission 
PO Box 1199
DICKSON ACT 2602

Dear Ms Kaur
 
ACCESS ARRANGEMENT FOR CARPENTARIA GAS PIPELINE
ISSUES PAPER

On behalf of the operator of the Carpentaria Gas Pipeline, we make the following comments in relation the Issues Paper issued by the Commission in November 2000.

As a general matter, we note that the Issues Paper appears to question the appropriateness of the derogation of the existing tariffs from the approval process which usually applies under the National Code. We would be most concerned if this was intended as this would suggest that the Commission may be taking into account matters which are not relevant to the exercise of the Commission’s powers in respect of the Queensland pipelines.  It would also fail to recognise that the derogations were accepted as part of the Intergovernmental Agreement which led to the establishment of the National Code, and the role which the Commission is performing under the Gas Pipelines Access (Queensland) Act

While we recognise that the legislative background to the derogations is relevant to the Commission’s consideration of the access arrangement, it is unfortunate that the Issues Paper includes such an extensive discussion of the conclusions the Commission reached in the course of undertaking another role, that is, in its role of consulting to the National Competition Council.  The issue currently before the Commission is whether the access arrangement satisfies the requirements of the Code, and discussion of these conclusions will not assist in encouraging informed submissions on this issue.

Regardless of the certification process being undertaken by the National Competition Council, and whether or not the derogated tariff arrangements are consistent with outcomes which could be expected under the Code, we submit that it is undesirable for the Commission to appear to challenge the derogations or, by inference, the legislation under which the Commission is exercising its power.  Similarly, the possibility that the Queensland regime may not be certified as effective does not alter the Commission’s role in relation to the proposed access arrangements.

In relation to specific issues raised in the Issues Paper, there is only one matter on which we wish to comment – whether the Commission should require trigger events or mechanisms to address the risk of forecasting errors.

We submit that requiring inclusion of trigger events, or an adjustment mechanism would be inappropriate: 

1.	if the nature of the revisions arising from a trigger event were such that the derogation would be maintained, or if the adjustment mechanism did not operate to revise tariffs during the period of the derogations, there would appear to be little benefit in undertaking a review process.  In this case, we would submit that such a requirement would be inappropriate and contrary to the public interest.

2.	alternatively, if the Commission sought to require revisions on a trigger event or an adjustment mechanism which resulted in revisions to the tariffs prior to November 2022, the Commission would be seeking to act in a manner inconsistent with the Gas Pipelines Access Law (Queensland).  The intent and effect of the derogations is clearly identified in the Intergovernmental Agreement:

…the tariff and tariff-related sections of the existing access principles for the [pipelines] are to be rewritten as reference tariffs (and reference tariff policy) for reference services to conform, as close as possible to the National Access Code, while preserving the existing tariff principles embodied in the original access arrangements. 
…
reference tariffs (and reference tariff policy) will be those taken from the existing access principles … These will not be subject to public and ACCC scrutiny until the nominated review date expressed in the individual access arrangements

(Intergovernmental Agreement, Annexure I).

If the Commission believes that the possibility of change to the derogations warrants inclusion of a trigger event or similar, we would submit that this is incorrect and inconsistent with the Commission’s role in approving the derogated access arrangements under the Gas Pipelines Access (Queensland) Act.  Since any change to the derogations could only be effected by legislation, any change to the derogated tariff arrangement should also be effected through clear legislative intent, rather than by artificial means such as inclusion of a review event or adjustment mechanism. 

We would be pleased to discuss these or any associated matters if the Commission wishes.

Yours faithfully

Sandra Dureau
Manager Regulatory Affairs Strategic Support 
For and on behalf of the operator of the CGP