Access to monopoly infrastructure
Access regulation seeks to promote effective competition in markets that depend on using the services of infrastructure that cannot be economically duplicated.
Envestra Ltd applied under s102 of the National Gas Law for a revocation of coverage determination for its Wagga Wagga gas distribution network. On 8 August 2013 the Council sent its final recommendation to the relevant Minister. The Council’s recommendation is that the relevant Minister decide not to make a revocation of coverage determination such that coverage would be maintained.
In its recommendation the Council noted that the NSW Government’s decision in relation to retail price regulation of gas was an important consideration in determining whether coverage should be continued.
The Council was of the view that the environment for competition in gas supply in NSW (including the area served by the Wagga Wagga distribution network) would be enhanced in the event that retail price regulation were removed and in that situation continued coverage of the network will promote a material increase in competition in the market for gas sales in the area serviced by the WWGDN. However the Council noted that:
Were the removal of retail gas price regulation not to be in prospect in at least the medium term, the Council considers that competition in the market for gas sales in the Wagga Wagga area is likely to remain stagnant irrespective of whether the WWGDN is covered. In such a circumstance criterion (a) could not be satisfied and coverage should be revoked.
On 7 April 2014 the NSW Minister for Resources and Energy wrote to the Council advising that the NSW Government had decided not to remove retail price regulation for gas. The Minister advised that based on the advice provided in the Council’s recommendation, he was not able to be satisfied that all the pipeline coverage criteria were satisfied in relation to the Wagga Wagga distribution network and therefore he must revoke coverage of the network.
Current status - 5. Final recommendation and decision