Page 1032 - Week 04 - Thursday, 18 June 1992
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Madam Speaker, this type of economic regulatory system, which has been successfully operating in the UK and most recently for gas in New South Wales, is a different approach to the one we have been accustomed to. I therefore, on behalf of the Chief Minister, would like to deal separately with the key components. Under the arrangements agreed by the Commonwealth Government in 1980, annual price increases were determined by a profit control formula. This was not satisfactory for the gas distributor and, as the price difference with Queanbeyan in 1989 showed, not for ACT consumers either. The current tariff setting arrangements will be replaced by a price control formula which will be made a condition of AGL's authorisation and its operation monitored by the Gas Authority.
The formula will apply to tariff gas users, who include domestic, commercial and small industrial users. Major industrial gas users, the contract market, will still be able to negotiate individual contracts with the gas company. However, there will be provision for the contract market to be brought within the economic regulatory system at a price control formula if this is considered to be in the public interest. As I have already mentioned, gas users on a tariff price will all be paying the same price as users in Queanbeyan and Sydney from 1 July. It is intended, therefore, that the price formula in AGL's authorisation will apply in the same way as currently applying to AGL in Queanbeyan. This will mean that not only will price increases be linked to CPI movements but also the disparity with Queanbeyan prices experienced in the past will not exist.
The establishment of an independent Gas Authority will ensure that the operations of the gas distributor will be overseen by a body which understands the needs of a commercial operation but is able to ensure that the gas distributor complies with the conditions under which the distributor is granted access to the market. As the proposed system is almost identical to the one in New South Wales, the Chief Minister has initiated discussions with the New South Wales Government to see how we might cooperate in the administration of these systems to our mutual benefit. These discussions are continuing. For the present, we intend appointing a single person for the position of chairperson of the Gas Authority of the ACT. We expect that the Gas Authority will establish a close relationship with the Gas Council of New South Wales.
The existing arrangements give AGL exclusive access to the ACT market. These will be replaced by an ongoing authorisation granted by the Minister. Conditions of the authorisation will impose a range of responsibilities on the gas distributor, including the need to take environmental protection into account in conducting their activities. The Minister may revoke an authorisation after 10 years of its operation, giving prior notice of 10 years, or at any time during its term for specified conditions and with appropriate safeguards. The Gas Authority may, after notifying the Minister, modify authorisations with agreement of the gas distributor. If there is no agreement, the matter will be examined by a review panel, and the authority is required to amend an authorisation in accordance with the review panel's recommendation.
There are a number of other elements which I wish to draw to members' attention. The Gas Levy Act, which was passed by the last Assembly on 10 December last year, is part of the overall approach to regulation of the gas industry. It provides for a levy to be paid each year by the gas distributor of 1.75 per cent of gross revenue from gas sales. This approach is in line with that adopted in New South Wales. The first payment of $420,176, which was for a
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