APA hits out at ACCC ‘zealots’ in pipeline debate

APA Group’s chairman has lobbed a fiery speech against the regulator, as its shares continue to fall.

Women in Resources member, Kirsten Marmion

APA Group chairman Len Bleasel has stepped up the company’s strident defence against the competition watchdog’s push for more gas pipeline regulation, saying he is concerned about “zealots” in the Australian Competition and Consumer Commission.

The comments, made at the company’s annual general meeting in Sydney today, come with its shares down nearly 20 per cent since late July and trading at a 21-month low. This is in no small partly because of investor concern that Australia’s biggest gas pipeline operator will get hit with tougher regulation.

The investor concern comes after a 12-month investigation into east coast gas markets led ACCC chairman Rod Sims recommend more pipeline regulation, a move that has resulted in another inquiry, led by Michael Vertigan.

“We took a great deal of exception to their (the ACCC) report on east coast gas supply and the accusations they made about us in terms of our charging ... I won’t be drawn in today to the emotional things I’d like to say about them,” Mr Bleasel told shareholders.

“We get concerned about the zealots inside the ACCC who think that everywhere we move they need to have a report or inquiry. I think that’s overdoing it.”

The ACCC has accused pipeline operators, of which APA is the biggest, of engaging in monopoly pricing.

Mr Bleasel said he did not believe the results of the Vertigan inquiry would hinder APA’s progress.

“A regulator is always a concern, you always want to do more than they want you to do, that’s life ... but hopefully they are working in the interests of consumers and the Australian economy,” he said.

At 1.18pm, APA shares were down 1c at $7.97, heading for a fresh 21-month low and extending the fall from a high of $9.85 three months ago, to 19 per cent.

Citi analyst Michael Dargue said the fall overdone.

“We think that APA is well positioned given multiple historical investigations have

suggested no changes,” Mr Dargue said in a note to clients this week.

“We think that regulatory risks are overpriced at present given APA has cashflow protection if assets became fully regulated, and long-term contracts which delay the timing of cashflow impacts by eight to ten years.”

But he said he did not see any imminent reason for the discount to unwind.

APA chief Mick McCormack, who has been vocal in his defence of the ACCC findings, said regulation would not stimulate more gas supply.

“Rather, it will stymie the investment and innovation in infrastructure needed to support gas suppliers in getting their gas to market,” he said.

“APA continues to believe that we have been part of the solution, not the problem, in the gas supply debate.”