Page 1031 - Week 04 - Thursday, 18 June 1992
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MR BERRY: I move:
That this Bill be agreed to in principle.
Madam Speaker, this Bill establishes an economic regulatory system for the distribution of natural gas in the Australian Capital Territory which will effectively put a ceiling on price increases for tariff customers. It also determines responsibilities for the safety and technical soundness of gas distribution in the Territory. Natural gas has been distributed in the ACT since 1980 without supporting legislation. Arrangements have been based on an exchange of letters between the then Commonwealth Minister for the ACT and the Australian Gas Light Co., or AGL. That agreement envisaged that legislation would be enacted, but it was still not finalised at the time of self-government and the average ACT gas consumer was paying over 20 per cent more than his or her counterpart in Queanbeyan.
During the first Labor Government we instituted a major review of gas distribution and imposed a price freeze pending the outcome of that review. As an interim measure, in January this year the Chief Minister concluded an agreement with AGL which ensured the removal of the remaining tariff differences with Queanbeyan and Sydney. For domestic consumers this occurred on 1 February, and for industrial and commercial consumers on a tariff rate the remaining difference will be removed on 1 July this year.
The Government has now given detailed consideration to the recommendations from the review which took into account the views of AGL and consumer comment. The review confirmed that a regulatory system is necessary. Regulation is necessary because there is only one gas distributor, AGL Canberra Ltd. A form of price regulation is essential to protect gas users from monopoly pricing behaviour, yet at the same time allowing the distributor to compete with suppliers of substitute forms of energy.
The Bill now before you, members, will provide an economic regulatory system which safeguards the interests of consumers, with minimum regulatory intrusion. The system will provide predictability, encourage efficiency by the gas distributor by preventing inefficiencies being passed onto consumers and foster good service and reasonable prices.
The proposed economic regulatory system contains the following principal elements: It provides for the issue of a long-term authorisation or licence to a gas distributor. The authorisation will include a price control formula initially determined by the Minister. It provides an effective means of adjusting the conditions of the authorisation, including the price control formula. It provides for the establishment of a part-time Gas Authority of the ACT to ensure compliance with the Act and authorisation and to monitor the operation of the gas distributor and the price control formula. It provides for the appointment, when and if required, of a review panel to determine issues when agreement between the Gas Authority and the gas distributor cannot be reached. It establishes a position of gas technical controller to ensure compliance with the safety and technical aspects of gas distribution. It establishes an annual research and development levy of 0.5 per cent on gas sales revenue or such lesser amount as determined by the Minister.
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