One of the important reasons the Australian Pipeline Industry Association (APIA) has survived – even prospered – into its 40th year has been its leaders’ determination over the years to look ahead and introduce major changes before those changes are forced onto the organisation or, even worse, before it is too late to make adjustments.

The biggest change occurred when the association expanded from being purely a contractors’ networking body to include owners and operators. This has seen a broadening of APIA’s services from networking events – and the legendary Annual Convention – to events that represent all sectors of the gas transmission industry to government, as well as raising the profile of the association and the industry.

Another important change occurred almost two years ago. That was when the Board decided to agree to the appointment of a full-time policy professional. The Board understood that the organisation needed to have a focused policy adviser to help co-ordinate submissions and policy documents, handling the detailed discussions. This allows the Chief Executive to focus on the broader message for politicians, political advisers, bureaucrats, media and, of course, the members, as well as the many other tasks involved in dealing with such a broad membership.

The new National Gas Law came into effect in July 2008 and one would have been forgiven for assuming that its finalisation would reduce the work on economic regulation, especially given the contribution APIA had already made to the debate over many years. But no, it was not to be. There is further work on economic regulation, with the Bulletin Board now up and running, and the continuing work on developing a Short Term Trading Market (STTM) and the Gas Statement of Opportunities (GSOO). Both the STTM and the GSOO might prove to be useful for the gas transmission industry. However they could also provide new opportunities for unnecessary regulatory intrusion – or a further gradual increase in regulatory intrusion – on this industry.

Rather than wait for the Bulletin Board to settle in and demonstrate its worth and possible expansion to deliver the outcomes expected from the STTM, the Federal Government has been persuaded by other sectors of the gas industry to proceed with the STTM. It has faced major hurdles and could have had a devastating impact on gas transmission companies’ contracts. However, through working positively on the Gas Market Leaders Group and the STTM Working Group, APIA’s President – and SEA Gas General Manager – Ashley Kellett, Epic Energy’s Steve Livens, SEA Gas Jeff Cooke and APA Group’s Stuart Ronan, have developed a workable STTM model. The task now is to do the same for the GSOO. APIA’s new Policy Adviser, Steve Davies, is providing support to Ashley, Steve, Jeff and Stuart in this process.

Mr Davies has a strong background in energy industry policy and has worked in the bureaucratic as well as in the private sector. Having also worked in an industry association, he comes to the position with a solid background in energy industry association issues as well as a determination to provide well-researched, and fearless, advice on all policy matters. He is being kept very busy helping to ensure that APIA’s member interests are considered in government policy making, particularly in relation to the proposed extention of the powers of the Australian Energy Market Operator (AEMO).

The AEMO is the final agency to be established as part of the National Energy Market Reforms and will take over the functions of the National Electricity Market Management Company, the Victorian Energy Networks Corporation, the Gas Market Company and the Retail Energy Market Company and will include the new National Transmission Planner. The AEMO will have responsibility for the operation of the Bulletin Board and the STTM. Mr Davies is leading APIA’s campaign against extending the AEMO’s powers to the level of the Australian Energy Regulator’s (AER’s) powers – the ACCC – in relation to information gathering and dissemination.

The election of the Rudd Labor Government has also seen a dramatically increased focus on environment policies, in particular greenhouse gas emissions and the proposed Carbon Pollution Reduction Scheme (CPRS).

There are several issues that are relevant to the transmission industry, including clarity of reporting, the impact on export- affected industries, distortions to the scheme, the pass through of costs, and the identification of operational control and the responsibility for emissions.

On many greenhouse policy issues, the transmission industry risks being caught up in policies that are more relevant to other systems such as distribution networks. The industry must continually make the point that transmission pipelines are very different structures from distribution pipelines and have very different influences and outcomes, particularly with regard to emissions reporting, but also in regard to economic issues.

The National Greenhouse Energy Reporting Scheme requires companies to report emissions and APIA has been able to demonstrate that transmission pipelines do not have ‘fugitive’ emissions. Moreover, because natural gas is the product being transported, any loss, or emissions, are clearly accounted for. Other outcomes of climate change policies include an expected increase in demand for natural gas. In this respect, the gas transmission industry needs government to introduce sensible policies that encourage investment in appropriate infrastructure or the nation risks not having the infrastructure available in time to meet the increased demand.

This industry is also involved in the early development of the Federal Government’s carbon capture and storage initiatives. Although, at first, the issue of transporting waste CO2 had been ignored, the government was quick to realise that most of the sites for storage of treated waste emissions were far from the sites where the emissions are produced. As part of the Carbon Storage Taskforce, APIA will be able to assist with assessing methods for capturing and transporting the product, as the type and treatment of the waste product will influence the type of transport vessel required.

As well as these significant policies, APIA will be working to ensure the gas transmission industry’s views are heard when the Australian Energy Market Commission (AEMC) undertakes its review of energy market frameworks in light of climate change policies and in the AER’s Weighted Average Cost of Capital (WACC) review .

The AEMC will be considering the impacts of the CPRS and the Renewable Energy Target on energy markets and looking to identify reforms to the policy, market and regulatory environments that could improve the energy market’s ability to accommodate the structural change brought about by these two policies. Mr. Kellett, is on the Advisory Committee for this review.

The WACC Review is highly significant for the energy industry, as it will ultimately determine the rates of return set by the AER; and APIA would expect that, despite the differences in the gas and electricity markets, it will form the basis of the 2009 WACC Review for gas transmission and distribution. APIA participated in a detailed joint submission with the Energy Networks Association and Grid Australia for this review, as well as making an individual submission highlighting the differences between electricity and gas markets.

There are other inquiries and papers requiring APIA’s contribution.

Two Senate inquiries, the AER draft guidelines and the discussion paper released by Infrastructure Australia will keep Steve Davies and the APIA secretariat fully occupied.