Second Reading

(Continued from 29 March 2017.)

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 16:37 :44 ): I advise that I am the lead speaker, but I will not be challenging the house’s time, and say right at the start that the opposition will support the bill. On 29 March 2017 the Minister for Mineral Resources and Energy introduced the National Gas (South Australia) (Pipelines Access-Arbitration) Amendment Bill amending the National Gas (South Australia) Act 2008.

The bill establishes the framework for arbitration for the non-scheme pipeline services, otherwise known as non-regulated pipelines, where commercial negotiations between a prospective user or users and the pipeline service provider break down. It also provides a framework for greater disclosure of information by non-scheme pipeline service providers. There are two gas pipelines in South Australia that would be affected by this bill: the Moomba to Adelaide pipeline and the Port Campbell to Adelaide pipeline.

The bill is the result of a report for COAG Energy Council that found that uneven bargaining relationships exist around the transportation of gas. Given that transportation makes up approximately 15 per cent of the price of gas, it is hoped that costs will be lowered through mandating commercial arbitration and greater transparency of pipeline services. All state and territory energy ministers, as part of their membership of the COAG Energy Council, support the legislation. Regarding the arbitration process, this bill requires a user or prospective user of a pipeline and the pipeline service operator to negotiate in good faith. Only if negotiations between the parties break down can the arbitration process commence. The arbitration process is only to be used as a last resort measure.

The Australian Energy Regulator (AER) is appointed as the scheme administrator. The AER can be notified by either the user or the provider that a dispute exists and then determine whether the matter should be referred to an arbitrator. An arbitrator for the dispute is to be appointed by mutual agreement of the parties involved; however, if they are unable to agree on an arbitrator then the AER will appoint one for them. The cost of the arbitrator will be borne equally between both parties unless the arbitrator deems otherwise in accordance with the National Gas Rules (NGR).

When making a determination, the arbitrator must take into account any pricing or other principle specified by the NGR. Under this bill, the arbitrator’s determination is binding on the parties involved in the dispute. Like many other acts, much of the detail will be outlined in the rules and regulations attached to the act. The National Gas Rules will primarily specify the details of the arbitration process. The bill itself only provides the high-level framework for the arbitration process to be established.

In a government briefing, I was advised that draft National Gas Rules will be presented to the COAG Energy Council for approval at its next meeting in July 2017. If approved, the National Gas Rules would be implemented in South Australia if this bill passes both houses of our parliament. The bill also stipulates that the collection, disclosure and publication of information relating to the services that may be provided by a non-scheme pipeline operator should be specified in the NGR. This includes the terms and conditions under which the service provider is prepared to make a non‑scheme pipeline available for use, the relevant costs and/or prices and the access contracts and arrangements by the service provider.

I support the general intent of the bill to improve the bargaining relationships that exist in the gas transportation industry and the potential for lower costs to the end user. However, it is important to note that there is nothing in this bill that requires that cost savings achieved by a pipeline user must be passed on to gas consumers.

With regard to consultation, during the COAG Energy Council process submissions were received from the following stakeholders: the Australian Energy Regulator, the APA Group, the Australian Pipelines and Gas Association, Australia Pacific LNG, DBP Transmission from WA, Epic Energy, Santos GLNG, Hydro Tasmania, Jemena, Major Energy Users Incorporated and the Energy Users Association. Stakeholders were generally supportive of the intent of the legislation, but raised various issues relating to some parts of the bill, predominantly around the potential structure of the arbitration process, which will be detailed in the National Gas Rules. Most stakeholders raised no concerns with regard to greater transparency.

Like many bills we discuss here, generally the framework in the bill or the potential act is quite sensible and based on principle. We are almost always told that we have to wait for the detail of how that will be implemented, that that would come in the regulations and, in this case, in the NGR, which will form the regulations attached this bill. As I said at the start, we support the bill. We want to do absolutely everything possible from opposition to contribute to achieving lower energy costs to energy consumers. Of course, that includes reducing the cost of the transportation of gas if possible.

We will support the passage of the bill through both houses and wait earnestly to know what will actually be in those National Gas Rules/regulations. Just like other bills—one that comes to mind very recently was the Firearms Bill—we all largely agreed on the principle in the bill itself but many, many months later the regulations are still being negotiated in great detail. That is proving a very fraught process, and I hope that will not be the case with this bill. As long as the regulations and National Gas Rules are sensible and impose burdens of transparency but no other unfair burdens on either the users or the suppliers of the service, then this bill will be very useful. I commend it to the house.