This consultation paper outlines Gas Industry Co’s proposed thresholds that would form Market Administrator guidelines pursuant to the recently-introduced regulation 19A of the Gas Governance (Compliance) Regulations 2008 (the Compliance Regulations), specifically relating to the following rules:
- rule 37 of the Gas (Downstream Reconciliation) Rules 2008 (the Reconciliation Rules)
- rule 67.3, 70.2 and 72.2 of the Gas (Switching Arrangements) Rules 2008 (the Switching Rules), all of which place obligations on retailers to use switch dates that fall within certain parameters in their switch notices.
It was initially proposed that rules 31, 32, 33 and 41 of the Reconciliation Rules would also be included in the threshold regime, however the Reconciliation Rules have since been amended to allow for estimation where actual volumes are not available, resulting in greatly reducing the incidence of alleged breaches of these four rules.
In May 2012 Gas Industry Co issued a Statement of Proposal setting out proposed amendments to the Compliance Regulations. The proposed amendments were designed to:
- tidy up the Compliance Regulations to clarify and enhance their operation, and rectify drafting errors and anomalies; and
- change the mandatory breach reporting requirements on the Allocation Agent and Registry Operator under regulation 11(1) to ensure that the compliance costs of alleging breaches of the type that are unlikely to raise a material issue do not outweigh the benefits (referred to as the threshold regime).
Regulation 11 places mandatory reporting requirements on service providers. It refers to the Registry Operator, Allocation Agent, Critical Contingency Operator and auditors appointed to carry out audits under the Reconciliation Rules or Gas Governance (Critical Contingency Management) Regulations 2008. For the purposes of the proposed amendments, only the Registry Operator and Allocation Agent will be subject to the threshold regime. Mandatory reporting requirements will still apply to all breaches identified by the Critical Contingency Operator and auditors. The thresholds would be applied by way of Market Administrator guidelines issued pursuant to regulation 19A of the Regulations.
In the document, Proposed amendments to the Gas Governance (Compliance) Regulations 2008 – further details of the threshold regime, released in December 2012, Gas Industry Co requested industry participants’ submissions in regards to the proposed rules to be covered by the above-mentioned threshold regime. Submissions on this paper were uniformly supportive of the proposals.
A recommendation that the Compliance Regulations be amended was accepted by the Minister of Energy and Resources and the amended Compliance Regulations came into force on 1 March 2014.