Report on greenfield exemption available
A report APGA commissioned to support its proposal for a modified greenfield exemption has been provided to the CoAG Energy Council.
APGA commissioned the report from Synergies Economic Consulting. It sets out the economic arguments in support of a modified greenfield exemption as well as presenting its key design features. We have provided the report to government as a contribution the ongoing deliberations on this topic.
In its January 2020 submission to the COAG Energy Council Consultation RIS for gas pipeline regulation, APGA proposed a modified greenfield exemption from economic regulation under the NGL and NGR for new pipeline investments made in a competitive environment. Pipelines with a greenfield exemption will be exempt from all aspects of Part 23 of the NGR (except for posted pricing, capacity and availability reporting), the capacity trading platform and day-ahead auction if the pipeline is not fully contracted, and could not become subject to full regulation under Part 9 of the NGR during the exemption term.
The central point of the case for a greenfield exemption is that it is widely accepted that the Australian market for open access pipeline construction and operation is workably competitive. As a result, where a new open access pipeline is built, terms and conditions will generally reflect the outcome of a competitive process. This means that the greenfield exemption should be automatically granted to new pipelines that meet the following eligibility criteria:
- the pipeline is a new pipeline;
- the pipeline is to be an open access pipeline from its commissioning;
- the pipeline will not be vertically integrated with gas production, wholesale or retail businesses; and
- the service provider provides relevant undertakings on pricing to subsequent shippers.
Over the past month, APGA has shared the greenfield exemption report with a range of key government stakeholders – in both the federal government and State/Territory governments. We have also met with the majority of State/Territory governments and relevant federal government agencies to discuss the proposal and the report further. It is fair to say that the report is receiving serious consideration from policymakers but, as always, there is plenty more work to be done.
Download the Synergies Economic Consulting report Proposed Modified Greenfield Exemption Provisions in the National Gas Law.