consolidated within the GMRG’s detailed design for the transparency and arbitration framework. Recommendation 4 That no change be made to the current coverage test at this stage. The appropriateness of amending the coverage test should be reviewed within five years after the arbitration framework is operational. This recognises that the gas market is changing very quickly and any changes to the test should occur only after the effects of introducing binding arbitration, the capacity trading and transparency reforms, and the CCA amendments are known. Should the proposed amendments to the CCA declaration criteria be implemented, the NGL should also be amended to reflect these changes. The form of the test should be reviewed within five years after the arbitration framework becomes operational. At this stage, it is envisioned that the AEMC would likely undertake the review. Conclusion The aim of the recommendations is to achieve commercial outcomes and therefore sustain investment. Contrary to the implementation of an altered coverage test that would likely lead to increased regulation of the pipeline industry, investment would still be in response to market signals rather than regulation. The reforms are not designed to damage the ability of the pipeline industry to generate appropriate commercial returns, but rather to limit excessive returns. The proposed solution should avoid any ‘chilling’ effect on investment. This approach has the potential to facilitate efficient commercial outcomes while avoiding the time, cost and uncertainty associated with regulatory processes. The recommendations seek to reduce the imbalance in negotiating power, constrain the exercise of market power and encourage downward pressure on gas transportation prices. This could see a minor reduction in delivered gas prices for Australian users and slightly higher ex-plant prices for producers, encouraging investment upstream and downstream. The conclusions and recommendations arising from this examination are consistent with the views of the majority of industry participants that the specification of the coverage test itself is not the major issue at this time.
Appendix D: Coverage applications and recent determinations Past applications considered by the NCC Year Application sought Pipeline Location Outcome 2015 15 year determination Comet Ridge to Wallumbilla Pipeline Loop Wallumbilla Gas Hub to Comet Ridge, Queensland 15 year (expires 13 July 2030) 2015 Light regulation Allgas Distribution Network Southern Brisbane, Gold Coast, Tweed Heads and Banora Point in north east New South Wales, and the Toowoomba and Oakey Light regulation 2014 Light regulation Envestra’s Queensland Gas Distribution Network Brisbane Region (Brisbane CBD, Ipswich and suburbs north of the Brisbane River) and Northern Region (Rockhampton and Gladstone) Light regulation 2014 Revocation of coverage Dawson Valley Pipeline Dawson River Gas Processing Facility to the Queensland Gas Pipeline at the Jemena Moura meter station. Revoked 2013 Revocation of coverage Wagga Wagga natural gas distribution network Wagga Wagga and Uranquinty, New South Wales Revoked 2013 15 year determination GLNG Pipeline Surat Basin to Curtis Island, Queensland 15 year (expires 13 July 2030) 2012 Coverage South Eastern Pipeline System (SEPS) Located in lower south east of South Australia, transports gas from Katnook to Safries and from Katnook to Glencoe, Mt Gambier, Kalangadoo and Snuggery No coverage 2012 15 year determination APLNG Pipeline Surat Basin to Curtis Island, Queensland 15 year (expected expiry February 2030) 2010 Light regulation Kalgoorlie to Kambalda Pipeline Transports gas from the Kalgoorlie South outlet on the GGP to Kambalda, Western Australia Light regulation 2010 15 year determination QCLNG Pipeline Surat Basin to Curtis Island, Queensland 15 year (expected expiry March 2029)
Capacity (TJ/d): 108 Wallumbilla to Gladstone Pipeline (previously known as QCLNG pipeline) APA Group Length: 334km Commissioned: 2014 Capacity (TJ/d): 1588 15-year 15 year no-coverage determination granted by Commonwealth Minister for Energy and Resources in 2010 because criteria (a) and (d) were found not to be satisfied. APLNG Pipeline Origin / Conoco / Sinopec Length: 530km Commissioned: 2015 Capacity (TJ/d): 1560 15-year 15-year no-coverage determination granted by Commonwealth Minister for Energy and Resources in 2012 because criteria (a), (b) and (d) were found not to be satisfied. Reedy Creek to Wallumbilla Pipeline (proposed) APA Group Length: 50km Proposed commissioning: 2018 Proposed capacity: bi-directional service up to 300 TJ/day n/a GLNG Pipeline Santos / Petronas / Total / Kogas Length: 435km Constructed: 2015 Capacity (TJ/d):1430 15-year 15-year no-coverage determination granted by Commonwealth Minister for Industry and Resources in 2013 because criteria (a), (b) and (d) were found not to be satisfied.
Northern Gas Pipeline (proposed) Jemena Length: 622km Proposed commissioning: 2018 Capacity (TJ/d): 90 n/a Bonaparte Pipeline Energy Infrastructure Investment (APA 19.9%) Length: 287km Commissioned: 2008 Capacity (TJ/d): 80 Unregulated Daly Waters to McArthur River Pipeline Power and Water Corporation Length: 330km Constructed: 1994 Capacity (TJ/d):16 Unregulated Wickham Point Pipeline Energy Infrastructure Investment (APA 19.9%) Length: 12km Commissioned: 2009 Unregulated Palm Valley to Alice Springs Pipeline Australian Gas Networks Length: 140km Constructed: 1983 Capacity (TJ/d): 27 Unregulated The Palm Valley Pipeline was initially subject to regulation as a covered pipeline under the Gas Code by the ACCC. However, no access arrangement was either submitted to or approved by the ACCC. In July 2000, following a recommendation from the NCC, the relevant minister decided to revoke coverage of the pipeline. Darwin City Gate to Berrimah Pipeline APA Group Length: 19km Unregulated The DCGBP was initially subject to regulation as a covered pipeline under the Gas Code by the ACCC. However, no access arrangement was lodged with or approved by the ACCC. In May 2003, following a recommendation from the NCC, the relevant minister decided to revoke coverage of the DCGBP. At the time that coverage was
revoked only small volumes of gas were being transported by the DCGBP. WA Eastern Goldfields Pipeline APA Group Length: 293km Constructed: 2015 Unregulated Goldfields Gas Pipeline Goldfields Gas Transmission Pty Ltd (APA Group 88.2% and Alinta Energy 11.8%) Length: 1427km Constructed: 1996 Capacity (TJ/d): 202.5 Full regulation GGP was a covered pipeline under the Gas Code. In 2003, GGT made an application to the NCC for coverage of the GGP to be revoked. In 2004, after considering the NCC’s recommendation the relevant Minister decided that coverage should not be revoked. Fortescue River Pipeline Fortescue River Gas Pipeline JV (DDG Fortescue River Pty Ltd 57% and TransAlta 43% interest) Length: 270km Constructed: 2015 Capacity (TJ/d): 26 Unregulated Telfer Gas Pipeline Energy Infrastructure Investment (APA 19.9%) Length: 443km Commissioned: 2003 Capacity (TJ/d): 29 Unregulated
Karratha to Cape Lambert Pipeline Robe River Iron Associates Joint Venture Length: 57km Constructed: 1984 Unregulated The KCLP was initially a covered pipeline under the Gas Code. However, in September 1999 the relevant minister decided to revoke coverage of the KCLP. Beharra Springs Pipeline Origin Developments Pty Ltd Length: 1.6km Capacity (TJ/d): 35 Unregulated The Beharra Springs Pipeline was initially covered under the Gas Code although no access arrangement was proposed by the service provider. In 1999 Boral Energy Developments submitted an application for revocation of the pipeline. In August 1999, the WA Minister revoked coverage of the pipeline following the NCC’s recommendation. Wheatstone Ashburton West Pipeline DBP Length: 123km Constructed: 2015 Unregulated Ashburton Onslow Gas Pipeline DBP Length: 30km Constructed: 2016 Unregulated
Appendix F: Distribution pipelines in Australia State Pipeline Owner Regulatory Status Length of Mains (Km) Customer Numbers QLD Allgas Gas Network GDI (EII) Pty Ltd (Marubeni Corporation/Deutsche AWM/APA Group) Covered pipeline subject to light regulation from July 2015 3 060 90 200 Envestra Gas Distribution Network Australian Gas Networks (Cheung Kong Infrastructure) Covered pipeline subject to light regulation from February 2015 2 700 91 800 Dalby Distribution System Western Downs Regional Council Unregulated 86 2 500 Roma Distribution System Maranoa Regional Council Unregulated 70 300 NSW and ACT Jemena Gas Networks Jemena/Singapore Power International Covered pipeline subject to full regulation 25 380 1 264 800 ActewAGL ACTEW Corporation/Jemena/Singapore Power International Covered pipeline subject to full regulation 4 620 134 300 Wagga Wagga Australian Gas Networks (Cheung Kong Infrastructure) Unregulated (coverage revoked 2014) 690 20 000
Central Ranges System APA Group Covered pipeline subject to full regulation 220 7 000 Envestra (Albury) Gas Network Australian Gas Networks (Cheung Kong Infrastructure) Covered pipeline subject to full regulation 368 20 000 VIC AusNet Services Listed Company Covered pipeline subject to full regulation This distribution system is a ‘designated’ pipeline under the NGL, which means it cannot apply for light regulation. 10 440 637 500 Multinet DUET Group Covered pipeline subject to full regulation. This distribution system is a ‘designated’ pipeline under the NGL, which means it cannot apply for light regulation. 10 090 687 400 AGN Vic Gas Network Australian Gas Networks (Cheung Kong Infrastructure) Covered pipeline subject to full regulation. This distribution system is a ‘designated’ pipeline under the NGL, which means it cannot apply for light regulation. 10 560 633 900