Pipeline rejects ‘gouging’ allegation
APA has rejected a push by the Centre Alliance for a regulatory crackdown on east coast pipelines.
APA has rejected a push by the Centre Alliance for a regulatory crackdown on east coast pipelines as part of a wide-ranging raft of reforms to the gas sector being considered by the Coalition.
The minor party raised the issue of potential pipeline “gouging” with the Coalition during broader talks this week seeking changes to the gas pricing trigger, new transparency measures and a long-term plan to boost domestic gas supply in order to pass the tax cuts package.
“I did mention that gas transport costs were of concern to some gas customers,” Centre Alliance senator Rex Patrick told The Weekend Australian.
“They feel as though there is gouging taking place and in discussions I had with the government we indicated that claim needed to be tested, and if that is occurring then further remedies may be required.”
APA has long been a target for both politicians and regulators amid a blame game over high prices and a supply shortfall on the east coast, because it owns pipelines that transport over half of Australia’s gas supplies.
The competition regulator found in 2016 that greater regulation of gas transmission pipelines would help to resolve gas supply shortages.
APA rejected that claim three years ago and yesterday said there was also no basis to the Centre Alliance’s accusation of gouging in the sector.
Instead, it called for increased supply as the quickest way to ease shortages.
“The cost of transmission is only 8 to 10 per cent of the final price of gas to the market and we have not raised our tariffs in real terms for more than a decade,” an APA spokesperson said.
“The critical issue for pricing continues to be increasing supply. Governments need to unlock more access to gas to bring down prices. APA is working with our customers, industry, government and the community to get more gas to market for customers and, importantly, allowing the market to work to deliver this outcome.”
Mr Patrick said APA should have no concerns if it had done nothing wrong.
“These companies need not worry. If there is no gouging, there will not be a problem.”
Finance Minister Mathias Cormann on Thursday declined to say the government had “horse-traded” with crossbench senators to win their support for the full tax cuts package and said Scott Morrison had a long-term commitment to boosting domestic gas supply and bringing energy prices down.
Australia’s petrol and gas lobby has slammed the proposed changes and called for more details to be released.
However, Mr Patrick said full consultation on any regulatory reforms would be done in conjunction with industry.
“The government have engaged experts in the preliminary outline but moving forward we fully anticipate consulting with stakeholders and experts on any planned measures.
“It’s not a stitch-up. We think there are problems and there are also solutions.”
APA said it had not been privy to any discussions between Centre Alliance and the government.
Mick McCormack yesterday signed off as APA boss, passing the chief executive’s baton to Rob Wheals. APA shares fell 1.06 per cent to $11.19.
Activist group Lock The Gate also weighed into the tense standoff between the gas sector and government by saying the industry only had itself to blame.
“The gas industry has shot itself in the foot, admitting Australian consumers are suffering from a gas price crisis, not a lack of supply,” Lock the Gate NSW spokesperson Georgina Woods said. “The industry is trying to have its cake and eat it too. When it’s convenient for them, gas companies argue we need to destroy more agricultural land to feed the market with high-cost, polluting gas, but when confronted by potential intervention by the government on gas prices, they take a different tune.”
Big industrial users are paying about $12 a gigajoule for gas in eastern states currently, roughly triple historical prices.