"The Productivity Commission and the Government's response have both recognised the core concern of owners of gas distribution networks and pipelines, that current access regulation has the potential to discourage new and ongoing investment and that change to the current regime is necessary" said the Chief Executive of the AGA, Bill Nagle.
"The Government's acceptance of the Commission's key recommendation-to provide greater guidance on the objectives of access regulation, and introduce pricing principles that will underpin future commercial negotiations and regulatory outcomes-is particularly welcome.
"Better guidance for regulators, access seekers and asset owners on the objectives and pricing principles underpinning the national access regime was a key measure sought by the AGA in its contributions to the Commission's review.
"The Government's response proposed significant improvements in this regard, in the form of a clearer objects clause for Part IIIA of the Trade Practices Act to underline the need to promote investment in essential infrastructure, and the inclusion of access pricing principles that recognise the need for third party access prices to adequately reflect commercial and regulatory risks.
"Importantly, the release of the Commission's final report clears the way for the commencement of a comprehensive review of the national gas access regime, that is informed by a detailed study into the risks and flaws of the current third party access regime. The AGA supports this review being undertaken by the Productivity Commission, given the critical need to ensure that the substantial benefits of the proposed reforms flow in a timely and consistent manner to the gas access regime.
"The Government has signalled that further consideration will be given in the review of the gas access regime to the introduction of specific mechanisms to facilitate new investment in gas infrastructure. Potential mechanisms include 'access holidays' or explicit recognition of the potential truncation of returns facing new investments exposed to access regulation. Such improvements would be a strongly positive signal for new investment in the downstream gas sector, and they reinforce the need to quickly commence the review of the gas access regime.
"It is equally important that the Commission's findings and the Government's response guide the critical deliberations of the Council of Australian Governments' Energy Market Review and a number of other regulatory processes currently underway, including the current reviews of gas access arrangements in Victoria and a forthcoming review in New South Wales.
"Another key element of the Commission's final report and the Government's response is the clear identification of the benefits of rebalancing regulation, including movement towards lighter-handed forms of regulation, if the long-term interests of the Australian community in the provision and maintenance of infrastructure services are to be protected.
"The Government's support of the need for consistent and effective merits review arrangements to ensure regulatory accountability will also be an issue that the AGA takes forward in the forthcoming review of the gas access regime.
"Our industry will continue to examine the detailed final report of the Productivity Commission and consider how some of the technical aspects of the Government's interim response would work in practice. There may be further issues that will require addressing or clarification in the process of implementing the interim response, and in the development of the Government's final response."
