The ACCC said it carefully assessed GasNet's proposed capital expenditure of $97 million over the next five years. It considered that expenditure of $57 million is justified and should be included in GasNet's regulatory accounts. If undertaken, the balance can also be included, providing it passes the tests under the National Gas Code.

The decision is expected to re-ignite the debate over the appropriateness of the ACCC as the regulatory authority for the sector.

ACCC boss Professor Allan Fels said that, while the ACCC has proposed to moderate GasNet's proposed revenue increase and capital expenditure program, it intends to accept a range of changes that lead to benefits for both GasNet and users of the pipeline system, including: merging GasNet's two current access arrangements (for the Principal Transmission System and the Western Transmission System); inclusion of the Southwest Pipeline in GasNet's asset base; allowing GasNet to choose whether new pipeline extensions will be regulated under its arrangements; recovery of approximately $10.3 million of benchmark revenue from the first access arrangement period that was not achieved because of constraints on GasNet's revenue control formula, and the removal of these constraints; and retention of approximately $16 million in tax allowance provided in the initial access arrangement under the pre-tax framework.

"The ACCC's draft decision under the National Gas Code is that it proposes not to approve GasNet's revised access arrangement in its current form", Professor Fels said.