The term of the current price regulation period for Envestra ends in June 2011, with the Australian Energy Regulator due to commence the process of establishing a new pricing regime for Envestra from September 2010. It is, therefore, appropriate for the Commission to review the regulatory instruments to apply to during the 2011-2016 regulatory period; namely the gas distribution licence held by Envestra Ltd, the Gas Distribution Code, the Gas Metering Code and Gas Industry Guideline No. 1.
Such a review was undertaken by the Commission in 2006 at the time the current price regulation regime was put in place.
The Commission has released its Final Decision and amended regulatory documents.
Under the licensing scheme established by the Gas Act 1997 (SA) (Gas Act), the owner of the main gas distribution system in South Australia, Envestra Limited (Envestra), is required to hold a licence authorising it to operate that distribution system. The Gas Act mandates that such licences must include certain terms and conditions. Those terms and conditions contain regulatory obligations which Envestra must comply with when operating the distribution system.
The term of the current price regulation period for Envestra ends in June 2011, with the Australian Energy Regulator due to commence the process of establishing a new pricing regime for Envestra from September 2010. It is, therefore, appropriate for the Commission to review the regulatory instruments relevant to gas distribution; namely the gas distribution licence held by Envestra Ltd, the Gas Distribution Code, the Gas Metering Code and Gas Industry Guideline No. 1.
Such a review was undertaken by the Commission in 2006 at the time the current price regulation regime was put in place.
The purpose of this Issues Paper is to seek feedback on a range of issues associated with the development of the regulatory instruments to apply to Envestra for the 2011-2016 regulatory period. This Issues Paper sets out the key issues requiring further consideration.
Comments on this Issues Paper should be provided to the Commission by COB 4 June 2010. Following its consideration of these submissions, the Commission will prepare a Draft Decision (and amended regulatory instruments in draft form) for release in July 2010.
Publications
The Commission has received 4 submissions to the Issues Paper.
Submissions
The term of the current price regulation period for Envestra ends in June 2011, with the Australian Energy Regulator due to commence the process of establishing a new pricing regime for Envestra from September 2010. It is, therefore, appropriate for the Commission to review the regulatory instruments to apply to during the 2011-2016 regulatory period; namely the gas distribution licence held by Envestra Ltd, the Gas Distribution Code, the Gas Metering Code and Gas Industry Guideline No. 1.
Such a review was undertaken by the Commission in 2006 at the time the current price regulation regime was put in place.
The Commission released an Issues Paper on 17 May 2010, with submissions due by 4 June 2010. The Commission has reviewed the submissions and, taking into account the issues raised in response to the Issues Paper, the Commission now releases this Draft Decision. This Draft Decision sets out the Commission’s proposed amendments to Envestra’s gas distribution licence, the Gas Distribution Code, the Gas Metering Code and Gas Industry Guideline No. 1.
The Commission notes that this Draft Decision represents the Commission’s proposed final amendments to the regulatory documents to apply to Envestra for the 2011-2016 regulatory period. This consultation process will provide stakeholders with a final opportunity to submit arguments as to why the Commission should not adopt the positions put forward in this Draft Decision paper.
Comments on this Draft Decision should be provided to the Commission by close of business 13 August 2010. Following public consultation on this Draft Decision, the Commission will release its Final Decision and amended regulatory documents by mid September 2010.
Publications
The Commission has received 2 submissions to the Draft Decision.
Submissions
The term of the current price regulation period for Envestra ends in June 2011, with the Australian Energy Regulator due to commence the process of establishing a new pricing regime for Envestra from September 2010. It is, therefore, appropriate for the Commission to review the regulatory instruments to apply to Envestra during the 2011-2016 regulatory period; namely the gas distribution licence held by Envestra Ltd, the Gas Distribution Code, the Gas Metering Code and Gas Industry Guideline No. 1.
The Commission has prepared its Final Decision to provide Envestra with sufficient certainty to submit its revenue requirement proposal to the AER for the 2011-2016 Access Arrangement review.
In making this Final Decision, the Commission has made amendments to the various regulatory instruments described in this Final Decision paper. Those amendments will take effect on and from 1 July 2011. While the Commission has highlighted the substance of the regulatory obligations to apply to Envestra for the 2011-2016 regulatory period, the final form of Gas Industry Guideline No. 1 will be determined by the Commission, through a separate consultation process with Envestra, the Technical Regulator and the AER prior to the commencement of the 2011-2016 regulatory period.
The Commission notes that, in light of the pending introduction of the National Energy Customer Framework (NECF), and its proposed amendments to the current contractual relationship between gas customers and retailers, the current review of the regulatory instruments to apply to Envestra for the 2011-2016 regulatory period is of a limited nature.
The Commission will ensure that the potential duplication between the obligations in the Gas Metering Code and the RMP are taken into account as part of a thorough review of the entire energy regulatory framework in the transition to the NECF. It is the Commission’s expectation that this review would occur in 2011.
Publications
The Commission reviewed the gas regulatory instruments to apply to Envestra for the 2011-2016 regulatory period in 2010, releasing its Final Decision in September 2010. The review foreshadowed the need to review Gas Industry Guideline No. 1 (the Guideline). While the Final Decision clearly articulated the Commission's intention to review the Guideline, it was necessary to undertake targeted consultation with Envestra and the Technical Regulator on the final form of the reporting requirements. The Commission has reviewed and now releases, the amended Guideline with immediate effect.
The key amendments to the Guideline include the introduction of new unaccounted for gas (UAFG) and Mains Replacement Plan reporting requirements. Due to the importance and scale of the Mains Replacement Plan, it is important to ensure active monitoring of Envestra’s performance against the plan. The Guideline requires Envestra to report the km of cast iron and unprotected steel mains replaced each month in each of the key networks identified for mains replacement. To maintain the link between the cast iron and unprotected steel mains targeted for replacement and the expected reduction in the level of UAFG in Envestra’s networks, Envestra will also be required to report UAFG figures for each of the key networks identified for mains replacement.
The Guideline applies to Envestra for the 2011-2016 regulatory period, including the 2011-12 reporting period. The results of the analysis of Envestra’s performance against the Guideline will be provided in the Commission's 2011-12 Annual Performance Report.
Publications
