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Gas access regime

Inquiry report

Released 10 / 08 / 2004

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  • Contents

Cover, Copyright, Terms of reference, Contents, Abbreviations and explanations, Glossary, Overview, Findings and recommendations

1   Introduction
1.1   Background to the inquiry
1.2   Scope of the inquiry
1.3   Conduct of the inquiry
1.4   Structure of the report

2   Australian gas industry
2.1   Gas supply chain
2.2   Demand for gas
2.3   Market characteristics of transmission pipelines
2.4   Market characteristics of distribution networks
2.5   Emerging competition

3   Gas Access Regime
3.1   History of the Gas Access Regime
3.2   The Gas Access Regime
3.3   Institutional framework
3.4   Relationship with other legislation
3.5   Nature of the Gas Access Regime

4   Is the Gas Access Regime working?
4.1   The Commission’s approach
4.2   Rationale for regulation
4.3   Benefits of the regime
4.4   Impact on pipeline investment - conceptual issues
4.5   Impact on pipeline investment - the evidence
4.6   Impact on pipeline investment - the Commission’s assessment
4.7   Price regulation when there is not substantial market power
4.8   Direct costs
4.9   Other costs
4.10   Overall assessment

5   Objectives and objects clause
5.1   Benefits of well specified objectives
5.2   Existing objectives
5.3   Assessing the existing objectives
5.4   Need for an overarching objective
5.5   Objectives
5.6   Consequential revisions
5.7   Guidance for access arrangements
5.8   Guiding principles for arbitrating a dispute

6   Coverage issues
6.1   Why coverage and the coverage criteria are important
6.2   The Commission’s approach
6.3   Inquiry participants’ initial views on coverage issues
6.4   Inquiry participants’ initial views on specific coverage criteria
6.5   Draft report proposals
6.6   Inquiry participants’ views on the draft report proposals
6.7   Assessment and recommendations

7   Access arrangements
7.1   Broad approach used to set reference tariffs
7.2   Pricing principles
7.3   Target revenue methodologies
7.4   Capital base
7.5   Ex ante regulatory rate of return
7.6 Use of competitive tenders to set reference tariffs
7.7   Detailed information requirements
7.8   Nonprice issues
7.9   Summing up

8   Lighter handed regulation
8.1   The case for lighter handed regulation
8.2   Proposed approach
8.3   Access policy
8.4   Ring fencing provisions
8.5   Information disclosure
8.6   Other features
8.7   Review of the form of regulation
8.8   Transitional issues
8.9   Certification issues

9   Investment and access arrangements
9.1   Background to the Commission's assessment
9.2   Options to deal with regulatory risk
9.3   Options to deal with asymmetric truncation
9.4   Summing up

10   Ring fencing and associate contracts
10.1   Effectiveness of the ring fencing and associate contract provisions
10.2   Costs imposed by the ring fencing and associate contract provisions
10.3   Service agreements and asset management contracts

11   Administrative and appeal processes
11.1   Timeliness
11.2   Appeal arrangements
11.3   Funding arrangements

12   Institutional arrangements
12.1   Existing institutions and arrangements
12.2   Effectiveness of the current arrangements
12.3   Improving the institutional arrangements

A   Conduct of the inquiry

B   Risk and regulatory truncation
B.1   Introduction
B.2   Capital asset pricing model and risk
B.3   Simulating regulatory truncation
B.4   Further comments on price regulation and risk

C   Gas pipelines in Australia

D   Issues regarding quantification of the net economic benefits of the Gas Access Regime
D.1   Modelling difficulties
D.2   Relevance of ACIL Tasman’s modelling
D.3   Specific issues in applying GE models to estimate the costs and benefits of the Gas Access Regime