AUSTRALIAN COMPETITION TRIBUNAL
DEI Queensland Pipeline Pty Ltd v Australian Competition & Consumer Commission [2002] ACompT 2
TRADE PRACTICES – access to pipelines – application for review of a decision of the ACCC to draft and approve an access arrangement for the Wallumbilla to Rockhampton Pipeline System – s 2.20 of the National Third Party Access Code for Natural Gas Pipeline Systems requires the ACCC to draft and approve its own access arrangements for the pipeline – s 3.17 of the Code specifies that an access arrangement must include review dates, having regard to the objectives of s 8.1 – s 3.17(ii) specifies that the ACCC may, in approving review dates, require that “specific major events” be defined that trigger an obligation on the pipeline owner to submit revisions prior to the review date – s 8.1 of the Code specifies general principles and objectives the ACCC should consider when drafting a Reference Tariff and Reference Tariff Policy for an access arrangement – ACCC drafted and approved an access arrangement that included a provision requiring the pipeline owner to submit revisions to the access arrangement within one month of the ACCC notifying it that a “specific major event” had occurred – whether the ACCC had power to include this provision – whether the objectives in s 8.1 are confined to tariff elements of an access arrangement – whether the reference in s 3.17 to s 8.1 impliedly limits the power in s 3.17 to trigger events only concerning the Reference Tariff – power in s 3.17 not confined to trigger events only concerning the Reference Tariff
National Third Party Access Code for Natural Gas Pipeline Systems s 1.1, 1.7, 1.8, 2, 2.2(b), 2.5, 2.13, 2.16(b), 2.19, 2.20, 2.24, 2.46, 3, 3.1, 3.3, 3.4, 3.5, 3.17, 3.17(a), 3.17(b), 3.17(i), 3.17(ii), 3.18, 3.19, 3.20, 3.5, 3.8, 8, 8.1, 8.1(e), 10.8
Gas Pipelines Access (Queensland) Act 1998 (Qld)s 58, 58(1)(b), 58(1)(c), 58(2), 58(3), 58(4)
Gas Pipelines Access (South Australia) Act 1997 (SA)
Pearce & Geddes Statutory Interpretation in Australia 5th ed. par4.34.
MATTER NO 1 OF 2001
RE: APPLICATION UNDER THE GAS PIPELINES ACCESS (QUEENSLAND) LAW FOR REVIEW OF THE DECISION BY THE AUSTRALIAN COMPETITION & CONSUMER COMMISSION MADE ON 1 NOVEMBER 2001 TO DRAFT AND APPROVE AN ACCESS ARRANGEMENT FOR THE WALLUMBILLA TO ROCKHAMPTON PIPELINE SYSTEM UNDER SECTION 2.20(a) OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS
JUSTICE HELY, PROFESSOR D ROUND & MR G LATTA
10 MAY 2002
SYDNEY
|
IN THE AUSTRALIAN COMPETITION TRIBUNAL |
MATTER NO 1 OF 2001 |
|
|
|
|
RE: |
APPLICATION UNDER THE GAS PIPELINES ACCESS (QUEENSLAND) LAW FOR REVIEW OF THE DECISION BY THE AUSTRALIAN COMPETITION & CONSUMER COMMISSION MADE ON 1 NOVEMBER 2001 TO DRAFT AND APPROVE AN ACCESS ARRANGEMENT FOR THE WALLUMBILLA TO ROCKHAMPTON PIPELINE SYSTEM UNDER SECTION 2.20(a) OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS |
|
|
BY: |
DEI QUEENSLAND PIPELINE PTY LTD DUKE QUEENSLAND PIPELINE PTY LTD DUKE AUSTRALIA OPERATIONS PTY LTD Applicants |
|
|
AND |
AUSTRALIAN COMPETITION & CONSUMER COMMISSION First Respondent |
|
|
AND |
EPIC ENERGY QUEENSLAND PTY LTD Second Respondent |
|
|
MEMBERS: |
JUSTICE HELY, PROFESSOR D ROUND & MR G LATTA |
|
|
DATE OF DETERMINATION: |
10 MAY 2002 |
|
|
WHERE MADE: |
SYDNEY |
|
THE TRIBUNAL ORDERS THAT:
1. The application for review be dismissed.
2. The decision of the first respondent to draft and approve an Access Arrangement for the Queensland Gas Pipeline pursuant to s 2.20 of the Code be affirmed.
|
IN THE AUSTRALIAN COMPETITION TRIBUNAL |
MATTER NO 1 OF 2001 |
|
|
|
|
|
|
RE: |
APPLICATION UNDER THE GAS PIPELINES ACCESS (QUEENSLAND) LAW FOR REVIEW OF THE DECISION BY THE AUSTRALIAN COMPETITION & CONSUMER COMMISSION MADE ON 1 NOVEMBER 2001 TO DRAFT AND APPROVE AN ACCESS ARRANGEMENT FOR THE WALLUMBILLA TO ROCKHAMPTON PIPELINE SYSTEM UNDER SECTION 2.20(a) OF THE NATIONAL THIRD PARTY ACCESS CODE FOR NATURAL GAS PIPELINE SYSTEMS
|
|
|
BY: |
DEI QUEENSLAND PIPELINE PTY LTD DUKE QUEENSLAND PIPELINE PTY LTD DUKE AUSTRALIA OPERATIONS PTY LTD
|
|
|
AND |
AUSTRALIAN COMPETITION & CONSUMER COMMISSION First Respondent |
|
|
AND |
EPIC ENERGY QUEENSLAND PTY LTD Second Respondent
|
|
|
MEMBERS: |
JUSTICE HELY, PROFESSOR D ROUND & MR G LATTA
|
|
|
DATE OF DETERMINATION: |
10 MAY 2002 |
|
|
WHERE MADE: |
SYDNEY |
|
REASONS FOR DECISION
THE TRIBUNAL:
1 This case concerns the proper construction of the National Third Party Access Code for Natural Gas Pipeline Systems (“the Code”) and the relationship between the Code and s 58 of the Gas Pipelines Access (Queensland) Act 1998 (Qld) (“the Act”). The pipeline the subject of the case is the Wallumbilla to Rockhampton pipeline system, also called the Queensland Gas Pipeline (“QGP”).
2 The Code was the result of an Agreement (“the Agreement”) by the Council of Australian Governments (“COAG”) on 7 November 1997 and was to be given legal effect by a uniform Gas Pipelines Access Law (“GPAL”). The GPAL and the Code were to be set out in schedules to legislation of the State of South Australia, and were to be applied by each other State (except in the case of Western Australia, for which different provision was to be made) by means of application legislation.
3 The objective of the Agreement was to establish a uniform national framework for third party access to natural gas pipelines that:
(a) facilitates the development and operation of a national market for natural gas;
(b) prevents abuse of monopoly power;
(c) promotes a competitive market for natural gas in which customers may choose suppliers, including producers, retailers and traders;
(d) provides rights of access to natural gas pipelines on conditions that are fair and reasonable for both Service Providers and Users; and
(e) provides for resolution of disputes.
4 The Agreement provided that in relation to pipelines classified or determined to be transmission pipelines pursuant to the GPAL, the Australian Competition & Consumer Commission (“the ACCC”) was to be the “Relevant Regulator”, subject to an exception in the case of Western Australia which is of no relevance for present purposes.
5 The Agreement (Clause 12) allowed for “derogations” from GPAL to be allowed, only if they were approved by all the Ministers and are specifically identified in the respective access legislation, or other legislation that is appropriate. The derogations intended to be applied by each party as at the date of the Agreement are set out in Annex I to the Agreement.
6 Annex I sets out the proposed derogations of the respective jurisdictions. The proposed derogations with respect to Queensland included the following:
“Access Principles
· The owners of the following pipelines will be required to establish an Access Arrangement in accordance with the National Access Code. For this purpose the tariff and tariff-related sections of the existing access principles for the following pipelines are to be rewritten as reference tariffs (and reference tariff policy) for reference services to conform, as close as possible to the National Access Code, while preserving the existing tariff principles embodied in the original access arrangements:
· PPL2 Wallumbilla to Brisbane
· PPL24 Ballera to Wallumbilla
· PPL30 Wallumbilla to Gladstone
· PPL30 Gladstone to Rockhampton
· PPL32 Gatton to Gympie
· PPL41 Ballera to Mt Isa
This will be accomplished in the following manner:
The Access Arrangement including the rewritten tariff and tariff-related sections of the existing access principles will be submitted to the ACCC, in accordance with the Code, under the following conditions:
· reference tariffs (and reference tariff policy) will be those taken from the existing access principles and will be included in the deeming provisions of the Queensland Access Legislation. These will not be subject to public and ACCC scrutiny until the nominated review date expressed in the individual access arrangements
· non-tariff related matters will be submitted to the ACCC for consideration by the ACCC in the normal manner
· other derogations required to achieve these outcomes will be included in the Queensland Access legislation.”
PPL30 is the pipeline the subject of these proceedings. PPL24, the Ballera to Wallumbilla Pipeline, is owned by Epic Energy Queensland Pty Ltd which appeared by leave in these proceedings. PPL24 is also referred to as the “South West Queensland Pipeline” (“SWQP”).
7 The preamble to the Act recites the COAG Agreement of November 1997 and its objectives. The Tribunal was informed that the Act was gazetted on 18 May 1998 and proclaimed so as to commence on 19 May 2000. Section 3 of the Act defines GPAL as meaning schedule 1 to the Gas Pipelines Access (South Australia) Act 1997 (SA)and the Code, a copy of which is set out in schedule 2 to the South Australian Act. Section 8 of the Act provides that GPAL applies as a law of Queensland, and, as so applying, may be referred to as the Gas Pipelines Access (Queensland) Law.
8 Part 6 of the Act is headed “Local Transitional Provisions”. Section 58 of the Act appears within that Part. Section 58 applies to various pipelines, including the PPL24 and PPL30: s 58(1)(b) and (c). Subsections 58(2), (3) and (4) are as follows:
“(2) The local Minister may once only, by gazette notice made within 30 days after this section commences, approve a tariff arrangement for each pipeline.
(3) The approved tariff arrangement is taken to be approved under the Gas Pipelines Access Law as the reference tariff and reference tariff policy for the access arrangement to be submitted under the law for the pipeline until the revisions commencement date for the access arrangement.
(4) The revisions submission date and the revisions commencement date mentioned in the reference tariff policy are taken to be the revisions submission date and the revisions commencement date for the access arrangement to be submitted under the Gas Pipelines Access Law for the pipeline.”
9 Pursuant to s 58(2) of the Act, the Queensland Minister for Mines & Energy by gazette notice on 16 June 2000 approved a tariff arrangement for QGP (the “QGP Tariff Arrangement”). Neither the Act, nor GPAL defines a “Tariff Arrangement”. The QGP Tariff Arrangement is as set out in Schedule 5 to the Access Arrangement for the QGP drafted and approved by the ACCC, to which reference will later be made. The QGP Tariff Arrangement established “Reference Tariffs” for classes of specified services, with provision for escalation of rates in specified years up to and including the year 2031.
10 Clause 3 of the QGP Tariff Arrangement is as follows:
“3 REVISION OF REFERENCE TARIFFS
3.1 Revisions Submission Date
In accordance with the Gas Pipelines Access Legislation, the date by which revisions to the Access Arrangement must be submitted to the ACCC for its approval is:
(a) the date six Months before the date when Duke reasonably expects the Capacity of the Pipeline will be greater than the Nominal Capacity of the Pipeline when its configuration is as specified in Schedule 1 to the Licence; or
(b) 31 August 2016;
whichever comes first.
3.2 Revisions Commencement Date
The Revisions Commencement Date specified in the Access Arrangement for revisions submitted in accordance with clause 3.1 of this Reference Tariff Schedule will be:
(a) for revisions submitted under clause 3.1(a) – the date when the Capacity of the Pipeline is greater than the Nominal Capacity of the Pipeline when its configuration is as specified in Schedule 1 to the Licence; or
(b) for revisions submitted under clause 3.1(b) – the date on which the Regulator approves the revisions.”
The Approval Process
11 The QGP is a Covered Pipeline (Code s 1.1 and Schedule A). Within 90 days of the commencement of the Code, the Service Provider (“Duke”) was obliged to submit a proposed Access Arrangement to the ACCC as the Relevant Regulator (Code: s 2.2(b)). An Access Arrangement must include at least the elements described in ss 3.1 to 3.20 (s 2.5). Pursuant to s 2.2(b), Duke submitted a proposed Access Arrangement for the QGP to the ACCC on 17 August 2000. Submissions were made by various parties to the ACCC, which issued a draft decision in April 2001 pursuant to s 2.13 of the Code.
12 On 5 July 2001 Duke submitted a revised Access Arrangement to the ACCC. On 1 August 2001 the ACCC issued a “final decision” pursuant to s 2.16(b) of the Code by which it decided not to approve Duke’s Access Arrangement. The ACCC required an amendment to the proposed Access Arrangement in the following terms:
“For the access arrangement to be approved, the Commission requires Duke to include in the arrangement a list of specific major events that will trigger a review of the non-tariff elements of the access arrangement.”
13 Duke did not conform to that requirement. On 1 November 2001 the ACCC issued its “final approval” pursuant to s 2.19 of the Code to the effect that it did not approve Duke’s revised Access Arrangement. The “final approval” included the following:
“The Queensland Government has determined in the derogation that the revisions submission date for the QGP access arrangement is the earlier of 31 August 2016 or six months before Duke reasonably expects the capacity of the pipeline will be greater than the ‘nominal capacity’. It appears that 2016 is the far more likely date.
With such a long likely period before the next opportunity for review, the Commission would face a very difficult task to try and predict how the Queensland gas market may develop over that period and what impact such developments may have for the operation of the QGP. The Commission would then have to determine whether the terms and conditions proposed in the access arrangement are appropriate for all those circumstances.
It seems far more appropriate and sensible in these circumstances for the Commission to assess whether the proposed terms and conditions in the access arrangement are suitable in the current environment. If there are significant changes in the Queensland gas market that impact on the operation of the QGP over the next 15 years, then an assessment of whether the proposed terms and conditions remain the most suitable can best be made at that time.
The Code recognises the merit of this approach by making provision for revisions to be triggered by certain events prior to the Revisions Submission Date.”
14 As a result of that decision, s 2.20 of the Code required the ACCC to draft and approve its own Access Arrangements for the QGP. The ACCC drafted and approved an Access Arrangement for QGP. Clauses 1.7 and 1.8 of that Access Arrangement provide as follows:
“1.7 Planned Revisions Submission Date and Revisions Commencement Date
In accordance with section 3.17 of the Code, Duke must submit revisions to this Access Arrangement to the ACCC by a nominated date and must indicate the date that the revisions are intended to commence. The Reference Tariffs Schedule defines when this must occur as follows:
Revisions Submission Date – means the date by which revisions to this Access Arrangement must be submitted to the ACCC, being the earlier of:
(a) 31 August 2016; or
(b) the date being six Months before the date when Duke reasonably expects the Capacity of the Pipeline will be greater than the Nominal Capacity of the Pipeline when its configuration is as specified in Schedule 1 to the Licence.
Revisions Commencement Date – means the date by which the revisions, once approved by the ACCC, are deemed to commence, being:
(a) in relation to revisions submitted on 31 August 2016 – the date on which the ACCC approves the revisions; or
(b) in relation to revisions submitted under subparagraph (b) of the definition of Revisions Submission Date – the date when the Capacity of the Pipeline is greater than the Nominal Capacity of the Pipeline when its configuration is as specified in Schedule 1 to the Licence.
1.8 Will revisions have to be submitted to the ACCC for approval before the planned Revisions Submission Date?
Duke is required to submit revisions to this access arrangement within one month of receiving written notification by the Commission that one of the following major events has occurred:
(a) the interconnection of another pipeline with the QGP; or
(b) the introduction of a significant new source of gas supply to one of the QGP’s markets;
that substantially changes the types of Services that are likely to be sought by the market or has a substantial effect on the direction of the flow of natural gas through all or part of the pipeline.1
In addition, section 2.26 of the Code enables the Service Provider, at any time prior to the Revisions Submission Date, to submit revisions to the Access Arrangement for approval by the ACCC.
___________________
1 Pursuant to section 58 of the Gas Pipelines Access (Queensland) Act 1998, and for so long as that section remains in effect, a review of this access arrangement as a result of one of these major events occurring cannot result in revisions to those parts of the access arrangement that are taken to be approved under that section.
____________________________”
15 The issue for determination in these proceedings is whether the ACCC had power to include in the Access Arrangements for QGP a provision to the effect of clause 1.8.
Relevant provisions of the Code
16 Section 2 of the Code has as its primary concern the processes by which an Access Arrangement is either approved or not approved by the ACCC, and with the circumstances in which the ACCC must draft and approve its own Access Arrangement. Section 3 of the Code has as its primary concern the content of an Access Arrangement in terms of the elements which, as a minimum, must be included.
17 As noted above, an Access Arrangement may include any relevant matter but must at least include the elements described in sections 3.1 to 3.20 (Code: s 2.5). Section 2.24 of the Code provides:
“The Relevant Regulator may approve a proposed Access Arrangement only if it is satisfied the proposed Access Arrangement contains the elements and satisfies the principles set out in sections 3.1 to 3.20. The Relevant Regulator must not refuse to approve a proposed Access Arrangement solely for the reason that the proposed Access Arrangement does not address a matter that sections 3.1 to 3.20 do not require an Access Arrangement to address. In assessing a proposed Access Arrangement, the Relevant Regulator must take the following into account:
(a) the Service Provider’s legitimate business interests and investment in the Covered Pipeline;
(b) firm and binding contractual obligations of the Service Provider or other persons (or both) already using the Covered Pipeline;
(c) the operational and technical requirements necessary for the safe and reliable operation of the Covered Pipeline;
(d) the economically efficient operation of the Covered Pipeline;
(e) the public interest, including the public interest in having competition in markets (whether or not in Australia);
(f) the interests of Users and Prospective Users;
(g) any other matters that the Relevant Regulator considers are relevant.”
18 The obligation that an Access Arrangement must contain, as a minimum, the elements described in ss 3.1 to 3.20 means that an Access Arrangement must contain:
· a Services Policy (ss 3.1 – 3.2);
· a Reference Tariff (ss 3.3 – 3.4);
· a Reference Tariff Policy (s 3.5);
· the Terms and Conditions on which the Service Provider will supply each Reference Service (s 3.6);
· a Capacity Management Policy (ss 3.7 – 3.8);
· a Trading Policy (ss 3.9 – 3.11);
· a Queuing Policy (ss 3.12 – 3.13);
· an Extensions/Expansions Policy (s 3.16);
· provisions relating to review and expiry of the Access Arrangement (ss 3.17 – 3.20).
19 Section 3 also provides a mechanism for determining a Reference Tariff through a competitive tender process (ss 3.21 – 3.36). Sections 3.3, 3.4 and 3.5 of the Code appear under the heading “Reference Tariffs and Reference Tariff Policy”. Section 3.4 provides that unless a Reference Tariff has been determined through that competitive tender process:
“... an Access Arrangement and any Reference Tariff included in an Access Arrangement must, in the Relevant Regulator’s opinion, comply with the Reference Tariff Principles described in section 8.”
Section 3.5 provides that:
“An Access Arrangement must also include a policy describing the principles that are to be used to determine a Reference Tariff (a Reference Tariff Policy). A Reference Tariff Policy must, in the Relevant Regulator’s opinion, comply with the Reference Tariff Principles described in section 8.”
20 Section 8 is headed “Reference Tariff Principles”. It includes a large number of clauses. Section 8.1 provides as follows:
“General Principles
8.1 A Reference Tariff and Reference Tariff Policy should be designed with a view to achieving the following objectives:
(a) providing the Service Provider with the opportunity to earn a stream of revenue that recovers the efficient costs of delivering the Reference Service over the expected life of the assets used in delivering that Service;
(b) replicating the outcome of a competitive market;
(c) ensuring the safe and reliable operation of the Pipeline;
(d) not distorting investment decisions in Pipeline transportation systems or in upstream and downstream industries;
(e) efficiency in the level and structure of the Reference Tariff; and
(f) providing an incentive to the Service Provider to reduce costs and to develop the market for Reference and other Services.
To the extent that any of these objectives conflict in their application to a particular Reference Tariff determination, the Relevant Regulator may determine the manner in which they can best be reconciled or which of them should prevail.”
21 Section 3.17 provides as follows:
“Review and Expiry of the Access Arrangement
3.17 An Access Arrangement must include:
(a) a date upon which the Service Provider must submit revisions to the Access Arrangement (a Revisions Submission Date); and
(b) a date upon which the next revisions to the Access Arrangement are intended to commence (a Revisions Commencement Date).
In approving the Revisions Submissions Date and Revisions Commencement Date, the Relevant Regulator must have regard to the objectives in section 8.1, and may in making its decision on an Access Arrangement (or revisions to an Access Arrangement), if it considers it necessary having had regard to the objectives in section 8.1:
(i) require an earlier or later Revisions Submission Date and Revisions Commencement Date than proposed by the Service Provider in its proposed Access Arrangement;
(ii) require that specific major events be defined that trigger an obligation on the Service Provider to submit revisions prior to the Revisions Submission Date.”
22 The period from when an Access Arrangement takes effect until the next Revisions Commencement Date is referred to in the Code as the “Access Arrangement Period”: (Code s 10.8). If the Access Arrangement Period is more than five years, the Relevant Regulator must not approve the Access Arrangement without considering whether mechanisms should be included to address the risk of forecasts on which the terms of the Access Arrangement were based and approved proving incorrect (Code: s 3.18). These mechanisms may include requiring the Service Provider to submit revisions to the Access Arrangement prior to the Revisions Submission Date if certain events occur.
23 Nothing in s 3.18 shall be taken to imply that the Relevant Regulator may not approve an Access Arrangement Period longer than five years if the Relevant Regulator considers this appropriate, having regard to the objectives of s 8.1 (Code: s 3.19).
Some common ground
24 Were it not for s 58 of the Act, the ACCC would have been empowered under GPAL, and in particular under ss 2.20, 3.17 and 3.18 of the Code, to include a provision to the effect of clause 1.8 in the Access Arrangements for QGP.
25 The object of s 58 of the Act is to allow the Queensland Minister, in effect, to take the place of the ACCC as the Relevant Regulator in approving the Reference Tariff and the Reference Tariff Policy for the pipelines to which s 58 applies. That is consistent with the provisions of Annex I of the 1997 COAG Agreement to the effect that Reference Tariffs (and Reference Tariff Policy) will not be subject to the scrutiny of the public and the ACCC up to the Revisions Submission Date, but that non-tariff related matters will be submitted to the ACCC for consideration in the normal manner.
26 Section 58 is a deeming provision which creates a statutory fiction, namely that the Reference Tariff and the Reference Tariff Policy specified in the QGP Tariff Arrangement are taken to be approved under GPAL until the Revisions Commencement Date for the Access Arrangement. The revisions submission date, and the revisions commencement date specified in the QGP Tariff Arrangement are taken to be the Revision Submission Date and the Revision Commencement Date for the Access Arrangement (“the review dates”). Deeming provisions are to be construed strictly. The express application of a statutory function is not to be extended by implication: Pearce & Geddes Statutory Interpretation in Australia 5th ed. at [4.34].
27 Sections 3.3, 3.4 and 3.5 of the Code, insofar as they contemplate involvement on the part of the ACCC in the fixing of the Reference Tariff, or Reference Tariff policy of the QGP are displaced by s 58(3) of the Act. In the event of any inconsistency between the Act and the Code, the Act prevails – (GPAL, Schedule 1, Section 5), although as the Act incorporates the Code as part of the Gas Pipelines Access (Queensland) Law, the issue is more appropriately regarded as being one as to the reach of the deeming provisions of s 58 of the Law, rather than inconsistency in the conventional sense.
28 The ACCC’s submissions accept:
· that the ACCC has no power under s 3.17(i) of the Code to require earlier or later review dates from those specified by the Queensland Minister;
· that the ACCC has no power under s 2.46 of the Code to approve proposed revisions to an Access Arrangement so as to affect the QGP Tariff Arrangement at any time before the Revisions Commencement Date specified by the Queensland Minister in that Arrangement.
The contentions of the parties
29 Duke contends that s 3.17 of the Code confers a discretion on the ACCC to be exercised in conjunction with, and as a part of, its power to approve review dates, to require that specific major events be defined that trigger an obligation on the service provider to submit revisions prior to the Revisions Submission Date, if the ACCC considers it necessary having regard to the objectives in s 8.1.
30 Two things are said to follow from this contention. First, the power to specify “trigger” events under s 3.17(ii) of the Code is an aspect of the power given to the Relevant Regulator in determining whether, and if so on what terms, it should approve the review dates proposed by the Service Provider in the Access Arrangement. By reason of s 58 of the Act, the ACCC has no power under s 3.17 to approve the review dates proposed by Duke. Accordingly, the ACCC has no power under s 3.17(ii) to specify the terms upon which such dates will be approved by it, as s 3.17(ii) is but an aspect of the ACCC’s power to approve review dates – a power which is not enlivened in the circumstances of the present case.
31 Second, the power to specify trigger events can only be exercised if the ACCC “considers it necessary having regard to the objectives in section 8.1”. The objectives in s 8.1 are the objectives which the Reference Tariff and Reference Tariff Policy of an Access Arrangement must be designed to achieve. They are pricing objectives, and the ACCC has no role to play in determining whether the tariff arrangements approved by the local Minister complied or comply with the pricing objectives in s 8.1.
32 In the ACCC’s submission, there is no basis for concluding that the specification as part of a “tariff arrangement” under s 58 of the Act of the review dates for a listed pipeline excludes the whole of the power of the ACCC under s 3.17(ii) to require that specific major events be defined to trigger an obligation on the Service Provider to submit revisions prior to the Revisions Submission Date or, if the Service Provider fails to include a clause of this kind in a proposed Access Arrangement, for the ACCC to draft and approve an Access Arrangement with such a provision. The ACCC further submits that both the language and the legislative policy of s 58 is to reserve the “tariff arrangement” to the Queensland Minister, but to leave the non-tariff aspects of the Access Arrangement to the ACCC.
33 The ACCC submits that it follows that it was open to the ACCC to exercise the power under s 3.17(ii) of the Code to require Duke to include a provision setting major events as a trigger for a review of the Access Arrangements earlier than the Revisions Submissions Date set by the Queensland Minister. However, in the ACCC’s submission, because of s 58 of the Act, any such review cannot entail revising the Reference Tariff until after that date. There is no reason, however, in the ACCC’s submission why the Service Provider ought not to be placed under an obligation upon the happening of a specific major event to submit revisions to an Access Arrangement dealing with matters other than a Reference Tariff or a Reference Tariff policy.
Decision
34 An Access Arrangement must include a Reference Tariff and a Reference Tariff Policy as well as, to use the language of Annex I, non-tariff related matters.
35 The ACCC is obliged under the Code to decide whether or not to approve an Access Arrangement proposed by a Service Provider, and in the circumstances outlined in s 2.20, to draft and approve its own Access Arrangement instead of that proposed by the Service Provider.
36 Where sections 3.3 to 3.5 of the Code apply, the ACCC must form an opinion, as part of the process of deciding whether or not to approve a proposed Access Arrangement, as to whether the Reference Tariff and the Reference Tariff Policy included in the Access Arrangement comply with the Reference Tariff Principles described in s 8 of the Code.
37 Sections 3.3 to 3.5 of the Code have no application in the case of the pipelines listed in s 58(1), if the local Minister exercises his power under s 58(2), as, in such a case, the Reference Tariff and the Reference Tariff Policy approved by the local Minister for each pipeline is taken to be approved under GPAL as the Reference Tariff and the Reference Tariff Policy for the Access Arrangement for that pipeline until the Revisions Commencement Date for the Access Arrangement.
38 In those circumstances s 58(3) of the Act necessarily displaces what would otherwise be the duty of the ACCC to concern itself with the provisions of the Access Arrangement as to a Reference Tariff and a Reference Tariff Policy, although the obligation on the ACCC to decide whether or not the Access Arrangement should be otherwise approved remains.
39 The problem in the present case is not so much with s 58(3) of the Act, as the parties are not at issue with respect to the operation or effect of that subsection. Rather, the contest has as its focus the operation and effect of s 58(4) of the Act, particularly in relation to s 3.17 of the Code.
40 Section 3.17 of the Code provides that an Access Arrangement must include review dates. Where s 3.17 operates in accordance with its terms, the review dates are to be approved by the ACCC, and in making its decision in that respect the ACCC must have regard to the objectives specified in s 8.1 of the Code.
41 Section 58(4) of the Act displaces what would otherwise be the duty of the ACCC to approve or disapprove of the review dates, and to have regard to the objectives in s 8.1 in making its decision in that respect. That is because the review dates specified by the local Minister are taken to be the review dates for the purposes of the Access Arrangement.
42 Section 58(4) of the Act supplies the review dates referred to in (a) and (b) of s 3.17 of the Code. The review dates approved by the Minister are taken to be the review dates for the Access Arrangement. A necessary consequence of the Minister’s stipulation in that respect is that the ACCC cannot exercise what would otherwise be its s 3.17(i) power to require different review dates from those provided by the Service Provider in its Access Arrangements.
43 Section 58(4) of the Act does not make any express provision in relation to the major event trigger referred to in s 3.17(ii). The specification of a major event trigger is not an alternative to the specification of the review dates. The Access Arrangement must include the review dates whether or not a major event trigger is also included.
44 The s 3.17(ii) power is one which the ACCC may exercise “in making its decision on an Access Arrangement”. The power is not appropriately characterised as merely an aspect of the power given to the ACCC to determine whether and if so on what terms it should approve the review dates proposed by the Service Provider in the Access Arrangement. The ACCC might approve the review dates proposed, but nonetheless require that the Access Arrangement include a major event trigger. Section 3.18 of the Code assumes that the ACCC has approved the review dates, but if the Access Arrangement Period accepted by the ACCC is more than 5 years, the ACCC is obliged to consider whether mechanisms such as a major event trigger should be included in the Access Arrangement.
45 Accordingly, Duke’s submission that as the ACCC had no role to play in relation to the approval of the review dates, it had no power to impose the major events trigger, should be rejected.
Second argument
46 Sections 3.4 and 3.5 of the Code have been drafted on the basis that an Access Arrangement, as well as the Reference Tariff and Reference Tariff Policy included in that Arrangement, must comply with the Reference Tariff Principles described in s 8 of the Code. Section 3.17 of the Code has also been drafted on the basis that the s 8.1 objectives may have a wider relevance than the design of a Reference Tariff or Reference Tariff Policy.
47 Section 8.1 of the Code lists a number of objectives. Only s 8.1(e) is expressed in terms which restrict its applicability to the setting of a Reference Tariff. The other objectives specified in s 8.1 are not necessarily factors which are peculiar to setting a Reference Tariff, or a Reference Tariff Policy. They are capable of a wider operation, and could impact upon, and be in turn affected by, non-tariff elements of an Access Agreement.
48 Thus, for example, the objective listed in s 8.1(b) of the Code is “replicating the outcome of a competitive market”. The outcomes of a competitive market involve not only prices that reflect efficient costs, but a range of non-price attributes (such as conditions of delivery and innovation) tailored to what customers want.
49 The s 8.1 objectives are those which characterise the outcomes of a market that works optimally. Market performance is a function of price and non-price conduct. Non-price conduct can affect the achievement of the objectives of s 8.1.
50 There are a number of reasons why, during an Access Arrangement Period, there may be pressures for change in relation to the non-tariff elements of an Access Arrangement. For example:
(a) a change in control of either the Pipeline owner or a Pipeline User may require modifications to the Trading, Queuing, or Extensions/Expansions Policy in order to ensure continued non-discriminatory and efficient access;
(b) the interconnection of a new pipeline may require a change in Trading Policy in order to facilitate efficient trading of Pipeline capacity across both Pipelines, for example, so that a User could trade capacity with multiple combinations of injection and delivery points; and
(c) the interconnection of a pipeline that was serving another gas field may result in the need to amend terms and conditions in relation to gas quality requirements and/or which resulted in a change in the direction of flow on the Pipeline that requires an amendment to the Services Policy.
51 The Code requires the ACCC to seek to achieve the objectives set out in s 8.1 not only in setting a Reference Tariff but also in approving any Access Arrangement. Section 3.17 empowers the ACCC to require the inclusion setting certain major events as “triggers” to review the Access Arrangement. The power is not, in its terms, limited to the Reference Tariff elements of an Access Arrangement. The reference in s 3.17 to s 8.1 does not impliedly limit the power in s 3.17 to triggers only concerning the Reference Tariff because the s 8.1 objectives are not so confined.
52 Accordingly, the Application for Review is dismissed, and the decision under review affirmed.
|
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely, Professor D Round and Mr G Latta. |
Associate:
Dated: 10 May 2002
|
Counsel for the Applicant: |
P L O’Shea SC |
|
Solicitor for the Applicant: |
Minter Ellison |
|
|
|
|
Counsel for the First Respondent: |
S Gageler SC, S Lloyd |
|
Solicitor for the First Respondent : |
ACCC |
|
|
|
|
Counsel for the Second Respondent: |
G Murphy |
|
Solicitor for the Second Respondent: |
Mallesons Stephen Jaques |
|
|
|
|
Date of Hearing: |
8 April 2002 |
|
|
|
|
Date of Judgment: |
10 May 2002 |