New Regulations Open Up Gas Supply Competition

  • Max Bradford

From today gas pipeline companies will be required to disclose information about their prices and performance , increasing opportunities for new suppliers and encouraging competition with benefits for consumers, Energy Minister Max Bradford said.

"New gas suppliers will find it easier to access gas pipelines for distribution to their customers," Mr Bradford said

One of the keys to getting more competition in gas supply was open access for all gas generation companies to pipelines for transportation and distribution, Mr Bradford said.

"There is real potential for more competition in the gas sector because the industry is opening access to any supplier and consumer on transparent terms and publicly disclosed prices."

The new regulations would help open up access and reinforce the industry's own efforts to establish a gas pipeline access code by providing competitors and consumers full and transparent information about prices, performance and costs relating to the natural monopoly pipeline business, Mr Bradford said.

Information disclosure is designed to:

enable more competition between gas retailers and wholesalers (with benefits for consumers) by promoting open access to gas pipelines
discourage excessive pricing and overcharging of captive consumers
encourage new wholesalers to enter the market.
discourage predatory pricing
discourage cross subsidisation by allowing consumers to distinguish between line and energy charges.
Under the new regulations, gas companies will be required to disclose :

separate financial statements for transmission, wholesale, distribution and retail businesses;
contract prices, terms and conditions;
financial, efficiency and reliability performance measures;
methodologies used;
pipeline capacity information;
and line charges.
The Gas (Information Disclosure) Regulations focus on natural monopoly pipeline businesses because gas companies' behaviour in this area is not constrained by competition.

As for electricity, the information disclosure regulations aim to separate the natural monopoly elements of distribution from the potentially competitive wholesale and retail sectors of the gas industry.

The regulations will be reviewed to ensure their effectiveness. The reviews will include an assessment of the development of competition in the gas industry. The first of these reviews is scheduled for after the first full round of disclosures in late 1998.