AEMC moves to revoke Northern Gas Pipeline exemption

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The AEMC will conduct a hearing on 7 May regarding the arbitration and information disclosure relating to the Northern Gas Pipeline.

Consequently, the AEMC has extended the time for it to make a final determination by seven weeks to 4 July 2019.

Stakeholders wishing to attend the hearing are required to register by 5 pm 2 May 2019 by submitting the provided registration form to the AEMC.  

On 21 February 2019, the AEMC made a draft determination not to make a rule to remove an exemption in the National Gas Rules that applies to the Northern Gas Pipeline.

The Northern Gas Pipeline, between Tennant Creek in the Northern Territory and Mt Isa in Queensland, was built by Jemena after it won a competitive tender process run by the Northern Territory Government in 2015. It started commercial operations in January 2019.

The pipeline is exempt from the framework for arbitration and information disclosure due to a derogation in the National Gas Rules. Environmental Justice Australia and the Institute for Energy Economics and Financial Analysis sought to revoke the derogation so the Northern Gas Pipeline would need to comply with the requirements for providing information, as well as the dispute resolution procedures, set out in Part 23 of the National Gas Rules.

The AEMC’s draft determination found that the existing regulatory regime for the pipeline – which was put in place by the Northern Territory Government as part of a binding contract – is effective. Also, adding new regulatory requirements for the pipeline would be costly and potentially confusing for both Jemena and users.

Gas pipelines in Australia are regulated under a negotiate-arbitrate framework. Pipeline owners and pipeline users negotiate the terms, conditions and prices for access to pipeline services.

Full regulation under Parts 8-12 of the NGR require pipelines to have access arrangements which set out the prices and terms and conditions which are approved by the regulator. These access arrangements serve as benchmarks for negotiations between pipeline owners and users.

Negotiation is supported by information disclosure and regulatory decisions. Arbitration can be used if a deal cannot be agreed.

Regulation under Part 23 of the NGR relies on information disclosure and the use of negotiation and arbitration. There are no regulator decisions made on tariffs or non-tariff terms and conditions.

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