Gas Regulation in Tasmania
The Economic Regulator undertakes the role of the Electricity Regulator under the Electricity Supply Industry Act 1995. From mid-2001, the role of the Office included responsibilities for regulation of the emergent natural gas industry in Tasmania. These responsibilities are articulated in the Gas Act 2000 (Gas Act) and the Gas Pipelines Act 2000 (Gas Pipelines Act) and accompanying regulations.
The Gas Pipelines Act recognises the National Third Party Access Code for Natural Gas Pipeline Systems (the Code). The Gas Act imposes on the Regulator responsibilities in relation to gas distribution pipelines and gas retailing. These responsibilities are supported by:
- Gas Distribution Code which sets the minimum standards for the operation of a distribution system and the terms and conditions under which distribution services are to be provided to gas retail customers.
- Gas Retail Code which establishes the minimum terms on which a retailer must sell gas to small customers.
- Gas Customer Transfer and Reconciliation Code which sets out obligations concerning the provision of information, the customer transfer process, standards for metering and process for the allocation and reconciliation of gas quantities between retailers.
In the administration of the Gas Act and Gas Pipelines Act, the Code and other related regulatory instruments, a number of functions are vested with the Regulator including the:
- administration of the licensing system for gas entities established by the Gas Act;
- establishment, monitoring and publication of standards and codes in respect of services provided by gas entities; and
- granting of pipeline licences.
In carrying out these functions, the Regulator must have regard to the objectives of the legislation, which include to:
- facilitate the development of a gas supply industry in Tasmania;
- promote efficiency and competition in the gas supply industry;
- promote the establishment and maintenance of a safe and efficient system of gas distribution and supply;
- establish and enforce proper standards of safety, reliability and quality in the gas supply industry;
- protect the interests of consumers of gas;
- create an effective, efficient and flexible regulatory system for the construction and operation of pipeline facilities and of pipelines for transporting natural gas and other substances to which the Act applies;
- ensure as far as reasonably practicable security of supply for users of gas; and
- protect the public from risks inherent in regulated activities.
The Regulator's functions under gas and electricity legislation reflect the fact that electricity and gas entities have, or will have, significant market power in their respective markets. Most electricity customers require the protection of regulated tariffs in respect of both price and conditions of supply as the supply of electricity is an essential service and customers cannot negotiate on an equal footing with the service providers. Some very large customers can negotiate successfully even in a monopoly industry structure because the market for their capital investment is national or international.
The price of natural gas is not regulated. As the supply of natural gas is new, it is not an essential service and its pricing must be competitive with electricity in order to gain customers. This need to be competitive imposes pricing restraint which might otherwise need to be imposed by regulation.
While the Regulator has certain statutory responsibilities, a major share of the responsibility for implementation and further development of the regulatory scheme rests with the entities. The approach taken in all licences has been "light handed". The Office has not sought to intervene in the day-to-day management of the entities. Rather, the Office seeks to ensure that all stakeholders are provided with sufficient information to properly assess the performance of the entities in meeting their regulatory obligations. The primary emphasis is on transparency and disclosure, with investigation and sanction reserved to be used when and if appropriate. |