The AER is now responsible for determining whether the form of regulation applying to a gas pipeline should change. We regulate gas pipelines in all Australian jurisdictions except for Western Australia.
The AER can conduct a form of regulation review in two circumstances. We can conduct a review if we receive an application from a person to make a form of regulation determination or if we decide to conduct a review of our initiative, without receiving an application.
In conducting the form of regulation review for the SWQP, we must apply the statutory ‘form of regulation’ test under section 112 of the National Gas Law (NGL). Under the form of regulation test, we must consider the effect that fully or lightly regulating a gas pipeline will have on:
- the promotion of access to pipeline services
- the costs that are likely to be incurred by an efficient service provider, efficient users and efficient prospective users of the pipeline service and the likely costs to end users.
In doing this, we must have regard to the National Gas Objective and the form of regulation factors set out in section 16 of the NGL, which help the AER to assess a service provider’s market power, and the ability of that service provider to exercise that market power.