Vertigan recommendations cautiously welcomed

APGA Chief Executive Cheryl Cartwright.

APGA Chief Executive Cheryl Cartwright.

The Australian Pipelines and Gas Association (APGA) has welcomed the report of the independent reviewer Dr Michael Vertigan and its proposals on transmission pipeline capacity negotiations.

Dr Vertigan has led a deep and thorough review of recommendations made in the Australian Competition and Consumer Commission’s Inquiry into the East Coast Gas Market, according to APGA Chief Executive Cheryl Cartwright.

“Dr Vertigan’s report rejects the proposal for a blanket increase in pipeline regulation in favour of a program that would provide increased information and commercial dispute resolution to complement the existing regulatory arrangements,” said Ms Cartwright.

“The pipeline industry accepts these recommendations will improve negotiated outcomes in gas transportation.

“While this program will directly address the concerns raised by various stakeholders during the ACCC inquiry, it must be clearly understood by everyone that it does nothing to address the central problem in the market which is the lack of availability of natural gas.

“Until policy-makers focus on developing and implementing solutions that will increase the supply of gas, the imbalance in the market will remain.”

Dr Vertigan’s recommendations directly addressed the concerns expressed to the ACCC inquiry, they are realistic and workable and could implemented within the current system.

“This is a far better solution than the alternative of scrapping the current regime which would mean that the regulation of hydrocarbon transmission pipelines would be different from the system that applies to all other infrastructure in Australia, and that would be a most undesirable outcome,” said Ms Cartwright.

Dr Vertigan’s report, Examination of the current test for the regulation of gas pipelines, was made available following yesterday’s meeting of Federal, State and Territory Energy Ministers who agreed that Dr Vertigan’s recommendations should be implemented.

“In 2017, reforms to introduce enhanced capacity trading and capacity auctions will be further developed,” said Ms Cartwright.

“These reforms will combine to increase competition, flexibility and efficiency in the gas transportation sector.

“It is now time for Energy Ministers to turn their full attention to the top priority issue of gas supply.

“Improved gas supply is urgently needed for Australia’s manufacturing sector and, as flagged last week in the preliminary report on energy security by Dr Finkel, to aid the decarbonisation of our electricity sector.”

Australia’s largest gas infrastructure business, APA Group, has also thrown it weight behind the market driven solutions

“The decision to maintain the National Gas Law coverage test in its current from confirms the robustness of the existing coverage test for Australia’s dynamic gas market and, importantly, provides certainty to the industry to move forward from the review process,” read a statement released by APA.

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