Dominique Hogan-Doran SC has been appointed by the Australian Energy Regulator as a member of the pool of arbitrators for the new arbitration framework for access to gas pipelines in Australia.
The appointment, pursuant to the new Part 23 of the National Gas Rules, is effective from 1 August 2017, when the amendments to the National Gas Law were proclaimed by the South Australian parliament.
The National Gas Law, set out in the Schedule to the National Gas (South Australia) Act 2008 (SA), originally commenced on 1 July 2008, replacing the former Gas Pipelines Access Law, more commonly known as the Gas Code. Mirror application legislation has been enacted in other jurisdictions implementing the National Gas Law in all States and Territories.
The Australian Energy Regulator has a new role under the National Gas Law and the National Gas Rules as the scheme administrator for a commercial arbitration mechanism applicable to disputes about pricing and access to non-scheme gas pipelines.
The decision to implement a new commercial arbitration mechanism follows an examination of the gas pipeline industry which examination highlighted the unequal levels of bargaining power and access to information that shippers face when seeking access to pipeline services.
On 14 December 2016, the Council of Australian Government (COAG) Energy Council endorsed recommendations for a new regime. The National Gas (South Australia) (Pipelines Access-Arbitration) Amendment Bill 2017 was agreed by Council on 17 February 2017 and passed the South Australian House of Assembly on 17 May 2017 and the South Australian Legislative Council on 20 June 2017. The Bill established an information disclosure and arbitration framework within the NGL and provided for the detail associated with the framework to be established in the NGR.
The design of the arbitration mechanism draws on both general commercial arbitration principles and negotiate-arbitrate infrastructure access regimes. The design is intended to provide greater certainty about the duration and the cost of arbitration, principally by requiring exchange of all information that might be relied on in arbitration during negotiations (including expert reports) and through short time frames for conduct of the arbitration. Arbitrators will be required to make a determination within 50 business days (with possible extension to 90 days).
In making determinations, arbitrators will be required to have regard to guidelines and principles in the NGR. The overriding principle is that terms of access should be consistent with outcomes reasonably to be expected in a workably competitive market. The pricing principles require prices to be cost reflective. Arbitration is therefore likely to focus on these issues.
This new approach to focusing on negotiated outcomes between pipeline owners and shippers represents an alternative to the economic regulatory approach with which the gas industry is familiar. Parties have the opportunity to reach a commercial outcome without the need for third party intervention. Where parties are unable to reach agreement a commercial arbitrator may be called upon. In short the approach aspires to promote commercial outcomes and resolve disputes in a commercial, timely and cost effective manner.