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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-06-19 Daily Xml
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NATIONAL GAS (SOUTH AUSTRALIA) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 18 June 2008. Page 3402.)

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (12:43): I thank members for their contributions to the bill. A number of issues were raised during the second reading, and I will seek to answer them now. The first series of questions was asked by the Hon. Mr Hood. He said:

I would appreciate knowing what areas of the state cannot get natural gas as I have a question mark over Ceduna and the APY lands, for example, as well as some other areas.

The answer I have been provided with is that Envestra is the company that generally undertakes the distribution of natural gas to customers via its gas distribution network in South Australia. The specific areas serviced by the distribution network are Adelaide, Barossa Valley, Berri, Peterborough, Port Pirie, Mount Gambier, Murray Bridge and Whyalla. As has been highlighted, a number of other areas have smaller reticulated gas systems rather than being connected to the natural gas network. This is understood to be principally due to the costs associated with the network investment required to connect regional areas not being commercially viable; that is, there will not be enough revenue generated by building a pipeline. Such commercial decisions are made by the privately owned network business Envestra. The second question asked by the Hon. Mr Hood was:

The Victorian government spent—and it sounds like it will soon begin spending again given recent announcements—significant money expanding on infrastructure in that region. In June 2003, the then Bracks Labor government detailed a $70 million expenditure on gas networks to extend their natural gas network up to 100,000 households in country Victoria. I have to ask the minister: what was different or special about the Victorian Labor government's circumstances that saw it expand its gas network into its regional areas?

The answer with which I have been provided is that the government is unable to comment on the reasons why Victoria decided to contribute towards the expansion of the gas network. There may be merit in looking at the expansion of the gas distribution network into regional areas; however, this would need to be argued on a case-by-case basis without impeding the regulatory regime that requires businesses to act commercially. The third question asked by the honourable member was:

The cost comparison between states also begs the bigger question: will this bill result in an across the network flat price?

The answer with which I have been provided is that the national gas law will not result in a flat price for the supply of natural gas across jurisdictions. The costs associated with the provision of gas by the regulated distribution businesses are assessed individually and, whilst a similar framework is utilised to undertake this assessment, network charges across jurisdictions will be different due to the particular circumstances of each business. The fourth question asked by the Hon. Mr Hood was:

What plans are in the pipeline [I assume that was an intended pun] for our mines, especially given the significant plans that Queensland has for the extension of its gas pipelines?

The answer with which I have been provided is that, in general, it would be expected that mining companies will fund the provision of energy infrastructure to support their projects as part of the commercial decision to undertake the investment. Before any gas pipeline is considered, it would be necessary, first, to determine the gas requirements for that project; and, secondly, to determine the location and size of any other nearby projects that would increase the viability of the investment over time. The fifth question is:

What has been done nationally or in this state about so-called fugitive emissions, that is, gas that seeps out of the pipelines, and, in a federal Labor carbon trading market, will that need to be taken into account?

The answer with which I have been provided is that it is understood that fugitive emissions from gas pipelines are being considered as part of the design of the commonwealth government's Emissions Trading Scheme, with a green paper detailing the key design parameters for the emissions trading regime expected to be released in July. Minister Wong outlined a number of key design parameters in a speech in February. Minister Wong indicated that the scheme will have maximal coverage of greenhouse gases and sectors to the extent that this is practical, indicating that over 70 per cent of national emissions are able to be practically covered by emissions trading, which implies that fugitives will be included in these emissions. Gas leakage is also dealt with under the gas licences issued under the Gas Act 1997.

Section 25 requires licensed gas distribution entities to comply with specified technical and safety requirements included in their licence conditions. Envestra's licence condition requires it to minimise gas leakage and account for gas lost to leakage. Furthermore, the Essential Services Commission of South Australia in its approval of Envestra's access arrangement has required it to meet certain gas leakage benchmarks. The Hon. Mr Parnell asked the following question:

The current experience in Western Australia that members would be aware of with gas shortages has highlighted a number of considerations that we should be taking into account in relation to this bill, in particular, when we get to a situation of having to ration gas supplies. The important questions are: who makes those rationing decisions; and, also, whose needs are most important? Is it a large factory with lots of jobs at stake? Is that more important than a hospital's need to sterilise their equipment or a pensioner's need to cook their evening meal?

The answer with which I have been provided is that gas rationing in South Australia would normally be dealt with under the Gas Act 1997. Section 37 of this act enables the minister (or his delegate) to temporarily ration gas distributed or sold by retailers. The minister would normally take into consideration such issues as public safety, well-being and employment when issuing gas rationing notices. Nothing in this bill changes the current arrangement. The Hon. Mr Lucas then asked:

What level of staffing has now been removed from ESCOSA and moved into the Australian Energy Regulator? What staff have left ESCOSA and have not gone into the Australian Energy Regulator? Have the total budget and resources available to ESCOSA now been reduced or are they to be reduced as a result of the reduced workload that ESCOSA will now confront or face as a result of the transfer of significant responsibilities and functions to the Australian Energy Regulator?

I have been provided with the following answer. The National Electricity South Australia (National Electricity Law) (Miscellaneous) Amendment Act 2000 (the act) has given the Australian Energy Regulator responsibility in relation to the economic regulation of electricity distribution systems going forward with ETSA Utilities' next revenue period commencing in July 2010. The act ensures that the Essential Services Commission of South Australia (ESCOSA) will continue to be responsible for the operation, administration and enforcement of ETSA Utilities electricity distribution determination until the end of the current regulatory period in 2010. ESCOSA continues to have responsibility for matters under the transmission and distribution codes and will retain responsibility for setting transmission and distribution service standards, quality and reliability of supply.

ESCOSA also continues to set electricity and gas retail standing contract prices. The portfolio responsibility for ESCOSA is with the Treasurer. Section 23 of the Essential Services Commission Act of 2002 requires ESCOSA to submit an annual performance plan and budget. It is understood that this has been submitted to the Treasurer and is currently being evaluated by the Department of Treasury and Finance. It is understood that ESCOSA and the AER have been working together with the aim of ensuring a smooth transition of functions under the new regime, which includes the transfer of staff. These discussions are ongoing. The passage of the national gas law through the South Australian parliament will enable the AER to commence its responsibilities in relation to the economic regulation of gas distribution systems. I commend the bill to the council.

Bill read a second time.

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