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Gas Amendment Bill (No. 2) 2001
GAS AMENDMENT BILL (No. 2) 2001
EXPLANATORY NOTES
GENERAL OUTLINE
Objectives of the legislation
The objective of this legislation is to amend the Gas Act 1965 by
creating new provisions obliging gas market participants to follow rules
relating to gas network operation and gas sales in a contestable market, and
by creating a new Part containing the new provisions and consolidating
existing provisions relating to gas market contestability.
Reasons for the Bill
Queensland has provided for the staggered introduction of retail gas
competition based on a transitional timetable, as part of the national
process of natural gas market reform. On 1 July 2001, large customers (gas
consumption of at least 100 terajoules per year) became contestable.
There is currently no legislative mechanism to give legal force to the
business procedures and rules needed to make contestability workable.
These procedures and rules, currently under development, will be
embodied in a Code of Conduct. The proposed amendments to the Gas Act
1965 (the Act) provides the means by which a Code of Conduct, approved
by the Minister, may be given legal effect.
The existing Act also contains existing provisions relating to
contestability, contained in the Preliminary and Miscellaneous Parts of the
Act. The proposed amendments consolidate these provisions in a new Part
of the Act, as well as providing for the approval of a Code of Conduct.
Administrative cost to Government
No financial implications for Government of an administrative nature are
associated with the proposed legislative amendments, insofar as the
legislation itself is concerned. The costs to Government associated with
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Gas Amendment Bill (No. 2) 2001
developing a Code of Conduct were foreseen and budgeted for before this
legislation was first proposed.
Consistency with Fundamental Legislative Principles
The proposed amendments allows a regulation to be made about
arrangements in the natural gas market relating to the operation or use of
covered distribution pipelines and transmission pipelines. Such a
regulation could incorporate by way of reference a code of conduct relating
to these arrangements (as considered by section 23(1) of the Statutory
Instruments Act 1992).
The Code would therefore be a document external to both legislation and
the legislative process, notwithstanding the notification, tabling and
Parliamentary disallowance regimes applicable to the regulation. However,
it is intended that, the Office of Queensland Parliamentary Counsel, when
drafting the authorising regulation, will encapsulate within the regulation
itself, the Code provisions that may impose substantive rights or
obligations.
The Scrutiny of Legislation Committee has in the past been somewhat
critical of similar types of rules and guidelines, when such rules and
guidelines are not subject to Parliamentary scrutiny.
The Code deals largely with commercial and technical matters
undertaken by market participants. As an extrinsic document, the Code can
be written in a format, which is both more user-friendly and promotes
industry "ownership" of the rules and procedures that apply to them. This
industry ownership of the Code will also allow it to evolve more in line
with market expectations (a form of quasi-self regulation), while still being
subject to final Government direction. It also allows the Code to be more
readily adaptable to possible changes in market circumstances.
This quasi-self regulatory approach has been successfully adopted across
many industries, and has already been adopted in the gas industry for the
approval of access arrangements for gas pipelines under the Gas Pipelines
Access (Queensland) Act 1998. Under this Act, the National Third Party
Access Code for Natural Gas Pipeline Systems (a separate document to the
legislation) sets out numerous obligations associated with facilitating third
party access to gas pipelines. This Gas Code is administered by a Code
Change Panel, which includes state government as well as industry
representatives. Similarly, the market rules governing activities in the
National Electricity Market are set out in a Code, which is administered by
an independent industry body.
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Gas Amendment Bill (No. 2) 2001
The proposed legislation requires the Minister to table the Code, and any
amendments to the Code, in Parliament within 14 sitting days. Provision is
also made to ensure the ready availability of the Code for inspection and
general public scrutiny.
The proposed legislation includes terms defined by reference to their
meanings given under the Gas Pipelines (Queensland) Access Law (the
Law) contained in the Gas Pipelines Access (Queensland) Act 1998. The
Scrutiny of Legislation Committee has in the past indicated its preference
for new legislation to fully define internally any required terms, rather than
defining them by reference to other legislation.
The definitions, which reference the Law, are substantial in nature, and
their replication in the Act would prove impractical since it would
necessarily involve, in addition to the definitions of the terms in the Law,
the repetition of a considerable amount of other text from the Law.
Gas market participants who are major stakeholders in this legislation
are familiar with the Law and its defined terms. The Law also plays an
integral part in the operation of the market, and participants would read
both the Gas Act and any approved Code in conjunction with the Law.
Furthermore, it was important to ensure that these new amendments do not
effect the scope or operation of the national Gas Pipelines Access Law, as
was intended under the inter-governmental Natural Gas Pipelines Access
Agreement.
For these reasons, the proposed legislation has adopted the approach of
defining certain terms by way of reference, rather than providing these
definitions in full.
Consultation
The Departments of Premier and Cabinet, Natural Resources and Mines,
State Development, Primary Industries, Employment and Training and
Treasury were consulted in the drafting of this Bill.
Natural gas producers, transmission and network pipeline operators and
retailers were consulted on the legislative mechanism for giving legal effect
to the Code, and extensively consulted on the broader matter of Code
development.
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Gas Amendment Bill (No. 2) 2001
NOTES ON PROVISIONS
Amendment of section 2 (Relationship to prescribed Acts--the
amendment inserts the Gas Pipelines Access (Queensland) Law into the list
of prescribed Acts to ensure that the Gas Pipelines Access (Queensland)
Law will prevail in the case of any inconsistency between the Gas Act and
Gas Pipelines Access (Queensland) Law.
Amendment of section 5 (Definitions):
"contestable customer"--the amendment replaces a reference to
section 5B with a reference to section 33A.
"non-contestable customer"--the amendment replaces a reference to
section 5C with a reference to section 33B.
Amendment of section 5B --relocated in the new part 5 and renumbered
as section 33A
Amendment of section 5C-- relocated in the new part 5 and renumbered
as section 33B.
Amendment of section 11--deleted, as this section becomes unnecessary
given the inclusion of the Gas Pipelines Access (Queensland) Law into the
list of prescribed Acts under section 2.
Amendment of section 20--the amendment replaces a reference to
section 52D with a reference to section 33C.
New PART 5--PROVISIONS RELATING TO CONTESTABILITY --
(inserted after part 4 of the Gas Act 1965) creates a new Part 5 and
consolidates all previously existing provisions of that Act relevant to
contestability, as well as the new provisions as described below.
New Section 33E--provides that a regulation may be made that deals
with arrangements relating to the operation or use of certain natural gas
distribution and transmission pipelines. Such a regulation could
incorporate, by way of reference, a code of conduct relating to these
arrangements (as considered by section 23(1) of the Statutory Instruments
Act 1992). The code would only take effect after it is approved under the
regulation.
New Section 33F--provides that, should a regulation under section 33E
include a code of conduct, the Minister must table a copy of the code in the
Legislative assembly within 14 sitting days of the gazettal of the regulation.
It further provides that, should the code be amended, the Minister must
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Gas Amendment Bill (No. 2) 2001
table a copy of the amended code in the Legislative assembly within 14
sitting days after the amendment of the code. The Minister must also keep
a copy of the code as in force for free inspection by the public during office
hours on business days.
Amendment of section 52D and section 52E --relocated in the new part
5 and renumbered as section 33C and section 33D respectively.
Amendment of section 64(2A)--deleted, as this section becomes
unnecessary with the inclusion of the Gas Pipelines Access (Queensland)
Law into the list of prescribed Acts under section 2.
© State of Queensland 2001