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Calls for ‘urgent amendment’ to Australia’s national gas laws

07 Nov, 2018
221
Australia’s gas laws operate to improve transparency in an opaque monopoly market-place, and to increase fairness for consumers. Image via. Utility Magazine


The Institute for Energy Economics and Financial Analysis (IEEFA) alongside Environmental Justice Australia (EJA) are seeking an amendment to Australia’s national gas laws to ensure energy prices become affordable and market competitive in Australia.

Today the AEEFA and EJA lodged an amendment request with the Australian Energy Market Commission (AEMC), who makes and amends the rules governing Australia’s electricity and gas markets. If successful, the amendment will constrain Jemena, an Australia gas pipeline operator ultimately owned by the Chinese (60 per cent) and Singaporean (40 per cent) governments, from the current practice of price gouging.

Bruce Robertson, financial analyst with IEEFA, said that Jemena is charging twice what is reasonably acceptable, ‘and then some’.

“The Chinese and Singaporean governments are reaping huge monetary benefits due to an exemption under the law allowing Jemena to charge in excess of what is reasonable for up to 15 years,” explained Robertson, who further remarked that Jemena knowingly built an ‘inefficient pipeline’ (referring to the Northern Gas Pipeline which connects Queensland and the Northern Territory) and are allowing to recover costs.

“They can then duplicate the pipeline and again recover their costs. And under the exemption, they get 15 years grace where they can charge what they want, and nobody – not the government, the consumer, nor other pipeline operators – can appeal,” Mr Robertson explained.

“We are asking for the amendment to be removed to better protect energy consumers bearing increasingly higher gas prices.”

Australia’s national gas rules operate to improve transparency in an opaque monopoly market-place and to increase fairness for consumers. Jemena received a special exemption from the National Gas Rules in 2017. The exemption applies to the current Northern Gas Pipeline and Jemena’s proposal to build another pipeline to transport gas from fracking operations in the Northern Territory.

David Barnden, Principal Lawyer with Environment Justice Australia, also said that Jemena’s pipeline ‘enjoys an exemption built into the rules’.

“The exemption allows Jemena to price gouge, potentially costing consumers over A$2 billion,” states Barnden, “no other pipeline gets this special treatment.”

AEMC will invite comments on the exemption after 15 November 2018. Following consultation, a decision from the AEMC should be provided in the new year.

Bruce Robertson says that while awaiting the AEMC’s decision, Jemena must also wait.

“Their recent media describing a proposed expansion of their Northern Gas Pipeline must be read as a company feeling the heat,” says Robertson.

“The National Gas Rules are designed to create transparency in gas market and pricing. We trust the AEMC will remove the exemption and bring professionalism, transparency and cheaper prices into Australia’s gas market, which in turn will reduce electricity prices.”

The amendment request by the IEEFA and EJA can be found here.

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