Australia's APA Group Rejects Call for Greater Regulation of Gas Pipelines

Gas infrastructure players APA Group has rejected Australian Competition & Consumer Commission’s (ACCC) proposal that further regulation of gas transmission pipelines will assist in resolving gas supply shortage in the east coast gas markets of Australia.

According to ACCC report on the competitiveness of wholesale gas prices in eastern and southern Australia which was released by the federal government on Friday, new gas supplies, further regulation of gas transmission pipelines and consistent flow of information can alleviate gas supply shortage in eastern Australia.

APA however said it welcomes the ACCC’s findings on the need to increase gas supply which has been supported by the broader government and industry-led changes which have improved gas transmission market transparency and function over the last few years.

APA Managing Director, Mick McCormack said, "APA welcomes initiatives that result in increased gas supply. However, the challenges of developing new gas supplies in a number of states have been obvious for a number of years. It is a perverse approach for the ACCC to consider that more regulation of the pipeline industry will contribute to solving this issue.”

According to McCormack increased regulation of pipelines will stymie further investment and innovation.

“It will result in pipelines being built for current demand, not future supply. This can only adversely affect future gas supply," he said.

In respect of the commentary on monopoly pricing within the report, McCormack said, "APA refutes any suggestion of monopoly pricing. Pipeline tariffs are the result of negotiations with commercially strong and savvy counterparties and often the outworking of competitive processes, as was the case with the South West Queensland Pipeline. APA is a publicly listed company with its accounts published every 6 months and continually scrutinised. Any review of APA’s accounts will show that APA is not benefitting from the concept of monopoly pricing as proffered by the ACCC."