AUSTRALIAN COMPETITION TRIBUNAL


APPLICATION BY ORICA IC ASSETS LTD & ORS RE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM

 

[2004] ACompT 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RE:     APPLICATION FOR REVIEW OF THE DECISION BY THE MINISTER FOR INDUSTRY, TOURISM AND RESOURCES PUBLISHED ON 19 NOVEMBER 2003 IN RELATION TO THE APPLICATIONS FOR REVOCATION OF COVERAGE OF CERTAIN PORTIONS OF THE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM

 

BY:     ORICA IC ASSETS LTD (formerly Incitec Ltd) (ABN 410 107 672 63) And ENDEAVOUR COAL PTY LTD (ABN 380 998 304 76) And ENERGY USERS ASSOCIATION OF AUSTRALIA INC (ABN 83 814 086 707) And ENERGY ACTION GROUP INC (A00127896)

 

NO 6 OF 2003

GYLES J (Deputy President), MR RC DAVEY and MISS MM STARRS

4 MARCH 2004

SYDNEY


IN THE AUSTRALIAN COMPETITION TRIBUNAL

NO 6 OF 2003

 

RE:

APPLICATION FOR REVIEW OF THE DECISION BY THE MINISTER FOR INDUSTRY, TOURISM AND RESOURCES PUBLISHED ON 19 NOVEMBER 2003 IN RELATION TO THE APPLICATIONS FOR REVOCATION OF COVERAGE OF CERTAIN PORTIONS OF THE MOOMBA TO SYDNEY GAS PIPELINE SYSTEM

 

BY:

ORICA IC ASSETS LTD

(formerly Incitec Ltd) (ABN 410 107 672 63)

FIRST APPLICANT

 

And

ENDEAVOUR COAL PTY LTD (ABN 380 998 304 76)

SECOND APPLICANT

 

And

ENERGY USERS ASSOCIATION OF AUSTRALIA INC

(ABN 83 814 086 707)

THIRD APPLICANT

 

And

ENERGY ACTION GROUP INC (A00127896)

FOURTH APPLICANT

 

THE TRIBUNAL:

GYLES J (Deputy President)

MR RC DAVEY

MISS MM STARRS

DATE:

4 MARCH 2004

PLACE:

SYDNEY


REASONS FOR RULING

 

1                     On 12 February rulings were made as to participation in the proceedings by various parties.  The transcript records the basis for the rulings.  It is appropriate to give complete reasons in relation to the decision that neither Energy Users Association of Australia Inc (EUAA) nor Energy Action Group Inc (EAG) is a qualified applicant for review of the relevant decision as neither body is adversely affected by the decision of the Minister in question within the meaning of s 38(1) of Schedule 1 to the Gas Pipelines Access (South Australia) Act 1997 (the Access Law).  That decision and the place it occupies in the legislative scheme sufficiently appear from the reasons set out in Application by Orica IC Assets Ltd Re Moomba to Sydney Gas Pipeline System [2004] ACompT 1.

2                     EUAA is a membership-based not for profit incorporated Victorian association which was formed on 1 January 2002.  The Rules of Incorporation provide that any bona fide energy user can apply to join.  Over the years EUAA has had members in Victoria, South Australia, New South Wales and the Australian Capital Territory.  It is claimed that members maintain operations in all Australian jurisdictions where energy is used extensively and that members consume more than 40 per cent of the gas used in New South Wales.  The evidence is that EUAA has participated in various reviews of energy policy, made submissions to regulators and policy makers on energy issues, and maintained membership of and involvement in various organisations related to energy.

3                     EUAA claims that the interests of EUAA and its members will be adversely affected as follows:

‘(i)       The decision adds to the transportation costs of gas and will flow on to gas costs in New South Wales.

(ii)       The problem of the gas price increases due to transport price differentials under periods of supply constraint has been demonstrated by the price increase to large gas users in NSW from the explosion at Moomba on New Years [sic] Day.  These price increases and other supply problems immediately impacted on NSW businesses using gas.

(iii)      This is a very practical demonstration of the continuing monopoly power held by the Moomba to Sydney pipeline and the extremely limited competitive influence brought to bear by the alternative routes.  It became very apparent during the crisis that gas supplies from elsewhere were difficult to secure and significantly more expensive to transport to New South Wales and the ACT.  It also became apparent that there were constraints in the South Eastern Australian pipeline system that would make it difficult and expensive to use alternative routes to the Moomba to Sydney pipeline.

(iv)      The decision also has the potential to influence gas transportation and gas costs in Victoria and South Australia.

(v)       The long term effects of the decision will be to increase both gas and peak load electricity costs in both Victoria and South Australia on days of gas transmission system constraint.

(vi)      The significant increase in gas fired generation capacity across the NEM has the potential to constrain/curtail gas supplies in Victoria, NSW, South Australia and the Australian Capital Territory and force up gas and electricity prices.  The pipeline owner APT and the gas retailer AGL will if the Moomba to Sydney pipeline remains uncovered have a greater ability to exploit these constraints and so increase both gas and electricity prices to all consumers.

(vii)     Energy users elsewhere may also be disadvantaged if this decision is allowed to stand as it sets a bad regulatory precedent for both gas and electricity regulation.’

4                     EAG is also a membership-based not for profit incorporated Victorian association.  The Statement of Purposes which is a preamble to its Constitution is as follows:

‘The Energy Action Group (formerly the SEC Action Group) has been formed to meet the need for a consumer organisation to act on behalf of domestic consumers of utility services in Victoria.

The objectives identified by the group at the present time are:

1              To secure access by all domestic consumers to the utility services required to maintain a reasonable standard of living.

2              To identify, and act to remove, any impediment to such access to essential supplies of utility services, by any individual domestic consumer or group of domestic consumers.

3              To subscribe to, become a member of, and/or co-operate with any other society, organisation or group, whether incorporated or not, whose objects are all or in part similar to those of the EAG.

4              To promote environmentally sustainable solutions in the pursuit of these objectives.

5              To encourage the community to participate in the development of policies and practices which will validate the EAG as a credible and effective organisation.’

5                     Any person or organisation who or which subscribes to the goals and objectives of EAG is eligible for membership.  It has had members in Victoria, South Australia, New South Wales and the Australian Capital Territory.  It has acted in various ways over the years in connection with energy issues including gas issues.  It has intervened in one proceeding in the Tribunal (Application by GasNet Australia (Operations) Pty Ltd [2003] ACompT 6).

6                     It is claimed that EAG members will be disadvantaged by the Minister’s decision to revoke coverage of portion of the Moomba to Sydney pipeline in the following ways:

·        ‘The decision adds to the transportation costs of gas and will flow on to gas costs in New South Wales and has the potential to influence gas transportation and gas costs in Victoria.  The long term effects of the decision will be to increase both gas and peak load electricity costs in both Victoria [sic] on days of gas transmission system constraint.

·        The problem of the gas price increases due to transport price differentials under periods of supply constraint has been demonstrated by the price increase to NSW large gas consumers from the Santos New Years day [sic] gas explosion at Moomba.  These price increases will flow on to NSW residential consumers given time.

·        The NSW Region of the National Electricity Market (NEM) has two announced proposals for gas fired electricity generation to meet future peak electricity loads.

·        The latest Vencorp long term forecast for gas demand indicates that the Victoria Region of the NEM could have installed between 4000 and 6500 MW of gas fired electric generation capacity in the next 15 years.

·        The significant increase in gas fired generation capacity across the NEM has the potential to constrain/curtail gas supplies in Victoria, NSW, South Australia and the Australian Capital Territory.  The pipeline owner APT and the gas retailer AGL will, if the Moomba to Sydney pipeline remains uncovered, have the ability to exploit the constraints that will increase both gas and electricity prices to all consumers.’

7                     It is submitted on behalf of East Australian Pipeline Limited (EAPL) that neither corporation as such is adversely affected by the decision – that the corporation is separate from the members of it and that, in any event, the decision does not adversely affect the interests sought to be advanced by the corporations.

8                     It is submitted for EUAA and EAG that they share a number of the interests listed in s 1.9 of the National Third Party Access Code for Natural Gas Pipeline Systems (the Gas Code) and that those interests are adversely affected, in particular the public interest in the promotion of competition.  It is submitted that the objectives of each organisation are to protect the public interest on behalf of members, as well as the public more generally, and that those interests are adversely affected by the decision of the Minister.  It is submitted that relevant interests do not have to be pecuniary or even specific legal rights, referring to Re McHattan and Collector of Customs (NSW) (1977) 18 ALR 154 per Brennan J at 157.

9                     Counsel for EUAA and EAG relied upon the objects and purposes of the corporations and the activities that they have conducted pursuant to those objects and purposes to establish the necessary effect upon the corporations. The role played by each may be described as that of a consumer advocate at a high level of abstraction.  EUAA broadly seeks to represent commercial users of gas and EAG broadly seeks to represent ultimate retail consumers of gas.  The emphasis is on matters of policy claimed to be in the public interest.  For example, in this case, each would argue for maximum coverage as it is believed that that would best promote the interests of users and consumers.  Neither corporation seeks to act as an agent or lobbyist for any particular user or consumer or identified group of users or consumers. 

10                  In considering the particular position of organisations of this character, reference was made to a decision of the Administrative Appeals Tribunal in Phillips v Department of Transport (1978) 23 ALR 314.  That decision is of little use here as the statute in that case provided that the interests of an organisation or association should be taken to be ‘affected’ if the decision related to a matter included in the object or purposes of the organisation or association.  In any event, that decision was only a factual application of that principle. 

11                  Reference was also made to the decision in United States Tobacco Company v Minister for Consumer Affairs (1988) 20 FCR 520, although without particular reference to or focus upon the nature of the parties.  That decision concerned the ability of the Australian Federation of Consumer Organisations Incorporated (AFCO) (a body not unlike EUAA and EAG) to join proceedings under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (ADJR Act) as a person whose interests were affected by the decision in question.  At first instance, Einfeld J had decided that AFCO did not have sufficient interest for that purpose (United States Tobacco Company v Minister for Consumer Affairs (1988) 19 FCR 184) although it was heard as amicus curiae.  On appeal the Court decided that participation by AFCO in the formal administrative proceeding preparatory to the decision in question gave it sufficient standing for the purposes of the ADJR Act proceeding, but did not decide the broad question as to whether it otherwise would have had a sufficient interest to be joined as a party.  The decision at first instance is against the submission of EUAA and EAG and was not set aside on appeal in that respect.  Furthermore, the reasoning of Einfeld J (no stranger to public interest organisations) is persuasive. 

12                  We were not referred to any authority which establishes the proposition that a consumer advocate organisation is adversely affected by a decision which relates to its objects and purposes and with which it disagrees on policy grounds.  That proposition would appear to be contrary to Right to Life Association (NSW) Inc v Secretary, Department of Human Services and Health (1995) 128 ALR 238 per Lockhart J at 253–254 and (it seems) Beaumont J at 265–266, (upholding the opinion of Lindgren J at first instance), as well as being contrary to the opinion of Einfeld J in United States Tobacco.  The proposition is too broad to be accepted as an appropriate test of standing across the board.  It is not sensible to speak of this kind of corporation being adversely affected by a decision which relates to a topic about which it is interested by virtue of its objects and purposes.  Its role as a public interest advocate is not affected by an actual decision which is arrived at one way or the other.  Each organisation is to be distinguished from individual members who will have varied (perhaps competing) commercial and personal interests.

13                  United States Tobacco shows that such organisations as EUAA and EAG may have interests pursuant to statute which are adversely affected by a decision even though it has no actual commercial interest at stake.  It is no doubt correct that the interests to be considered in relation to certain statutory issues may be quite broad in scope, and not restricted to economic interests.  However, the terms upon which the supply of gas is regulated pursuant to the Access Law and the Gas Code between buyer and seller are essentially economic in character. 

14                  It is common ground that the issue of standing must be answered by reference to the subject, scope and purpose of the legislation (Allan v Transurban City Link Ltd (2001) 208 CLR 167; Alphapharm Pty Ltd v Smithkline Beecham (Australia) Pty Ltd (1994) 49 FCR 250; and Edwards v Australian Securities Commission (1997) 72 FCR 350).  We concluded that construction of the legislative scheme here does not lead to the conclusion that either EUAA or EAG is affected by a decision of the Minister to revoke coverage.  Counsel for EUAA and EAG is correct to point out that there is scope for the organisations to participate in the process up to the point of the Minister’s decision.  Indeed, either corporation could, if so inclined, have sought revocation of coverage.  That process indicates recognition of the wide ramifications of a decision to be made and of the advantages of a relatively open procedure, including the ability for the decision maker to receive material encompassing a variety of points of view.

15                  However, we agree with the submission for EAPL that this process concludes at the point of the Minister’s decision.  The requirement that the applicant for review be ‘adversely affected’ by the decision is at that point introduced for the first time.  It is sensible that this be so.  The Minister’s decision is itself an informed and structured consideration of a recommendation of the National Competition Council, which in turn is the result of an informed and structured process.  It does not follow that a person who played some role in these processes should be able to challenge the result.  The two stage process is likely to have taken some time and will have a direct effect upon various parties immediately involved.  A further merits review (albeit with statutory time limits which might be extended) will inevitably involve further uncertainty for a period and the incurring of expense by those involved.  Furthermore, initiating a review by the Tribunal involves a significant commitment of public resources.  It is reasonable that the legislature should have decided that a substantive further merits review should only be initiated by a person (including a corporation) with an interest sufficient to warrant these consequences. 

16                  In our opinion, the involvement of a party in the prior process does not of itself have the consequence that it is adversely affected by the decision in question within the meaning of s 38(1).  The position in American Tobacco was different.  The ADJR proceeding directly related to the administrative proceeding to which AFCO was an actual party.  The requirement that a review be initiated only by a person who is actually adversely affected is not unduly narrow or restrictive.  A decision to grant or to revoke or to refuse to grant or to refuse to revoke coverage is likely to adversely affect a range of parties.


I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Ruling herein of the Tribunal.



Associate:


Dated:              4 March 2004



Counsel for Orica IC Assets Ltd:

AC Archibald QC with M Collins



Solicitor for Orica IC Assets Ltd:

Mallesons Stephen Jaques



Counsel for Endeavour Coal Pty Ltd:

C Scerri SC with CM Caleo



Solicitor for Endeavour Coal Pty Ltd:

Allens Arthur Robinson



Counsel for EUAA and EAG

J Beard



Counsel for EAPL:

N Young QC with J Elliott



Solicitor for EAPL:

KPMG Legal



Counsel for the Minister

AI Tonking



Solicitor for the Minister:

Australian Government Solicitor



Counsel for the NCC:

PR Whitford



Solicitor for the NCC:

Clayton Utz



Counsel for the ACCC:

M Painter



Solicitor for the ACCC:

Deacons



Counsel for AGL:

CA Moore



Solicitor for AGL:

Gilbert + Tobin



Date of Hearing:

12 February 2004



Date of Reasons for Ruling:

4 March 2004