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Revocation of coverage of the Wagga Wagga natural gas distribution network (Final recommendation and decision)
On 8 August 2013 the Council sent its final recommendation to the relevant Minister, the Hon. Chris Hartcher MP, NSW Minister for Resources and Energy. The Council’s recommendation is that the relevant Minister decide not to make a revocation of coverage determination in relation to the Wagga Wagga Gas Distribution Network, such that coverage would be maintained. In making this recommendation the Council is satisfied that all of the four pipeline coverage criteria are satisfied.
The National Gas Law requires the relevant Minister to use his best endeavours to make his decision within 20 business days after receiving the recommendation. The Council understands that the relevant Minister received the recommendation on 9 August 2013. The 20-day period therefore ended on 6 September 2013. The relevant Minister had written to the Council advising that he does not consider it reasonably practical to make a decision at the time given the Australian Energy Market Commission (AEMC) was still to provide its final report on its review of energy retail competition in NSW and the NSW Government had not made a decision in relation to price deregulation. The Minister had confirmed that he would make a decision as soon as was reasonably practicable after the NSW Government had considered the findings and recommendations of the AEMC report.
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.
