The Australian Energy Regulator (AER) has issued a draft decision to grant an exemption to Power and Water Corporation (Power and Water) from its ring-fencing obligations under sections 139, 140 and 141 of the National Gas Law (NGL) for the McArthur River Mining Pipeline in the Northern Territory.
The AER considers that Power and Water has satisfied the relevant criteria for granting the exemption under rule 34 of the National Gas Rules (NGR). The AER considers that, in the circumstances, the cost savings resulting from the exemption outweigh any potential benefits of complying with the ring-fencing obligations.
Power and Water is required under the NGR to notify the AER, without delay, if it no longer qualifies for the exemption.
The draft decision sets out further conditions that requires Power and Water to notify the AER of any changes to contractual arrangements, uncontracted or ‘as available’ capacity or proposals to augment the pipeline.
Stakeholders are invited to provide written submissions and comments on the draft decision by 8 August 2024. Submissions and comments can be sent electronically to gaspipelineexemptions
aer [dot] gov [dot] au (gaspipelineexemptions[at]aer[dot]gov[dot]au. )
Background
Gas ring-fencing laws were extended under the March 2023 gas reforms to include non-scheme pipelines. Service providers of these pipelines are required to comply with the new laws from 2 March 2024.
The ring-fencing framework set out in Part 2 of Chapter 4 of the NGL provides for the specific obligations applicable to gas pipeline service providers. The provisions ensure that related businesses do not gain a competitive advantage by virtue of their common ownership or operation with pipelines.
Service providers may apply to the AER for an exemption from the ring-fencing provisions under rule 34 of the NGR.
The AER has published a Compliance bulletin – new obligations on gas pipeline, compression and storage service providers