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Overview
The Gas Distribution Contracts Oversight Scheme is a voluntary, industry-agreed scheme which assesses standard gas distribution service agreements against a set of principles.
What the Scheme does
The Scheme aims to ensure:
- the core terms and conditions in distribution arrangements are clear and reasonable
- promote market efficiency
- ultimately enhance consumer outcomes. The Scheme does not assess negotiated agreements.
The Scheme was endorsed by the Minister of Energy and Resources in September 2012.
Read more about Minister's endorsement on Background page
More information
The Previous Assessments section has information on the 2013 and 2014 assessments of standard gas distribution service agreements.
This includes the 2014 Second Assessment.
In future, assessments will be conducted on an exceptions' basis (as contracts are further revised or replaced).
We continue to assess progress with executing new distribution contracts consistent with the Distribution Scheme principles.
The Background section has information on the development, scope and structure of the Gas Distribution Contracts Oversight Scheme, including the recommendation to the then Minister of Energy and Resources and his subsequent endorsement of the Scheme in September 2012.
Previous assessments
About the Scheme
The Gas Distribution Contracts Oversight Scheme (the Scheme) is a non-regulatory gas industry governance arrangement that was endorsed by the Minister of Energy and Resources in September 2012.
What it does
The Scheme's has three main goals:
- to ensure that the core terms and conditions in distribution arrangements are clear and reasonable
- to promote market efficiency
- to ultimately enhance consumer outcomes.
Distribution principles
The Scheme includes a set of distribution principles that cover non-price contractual (and inferred) terms, such as the obligations and rights of parties and information exchange and use, as agreed between gas distribution businesses and gas retail businesses.
The principles are not intended as a model contract for distribution services. Instead, they are designed to provide a high-level context for commercial negotiations between distributors and retailers.
Publicly available gas distribution arrangements are assessed and reported on against these principles by an independent assessor.
How the Scheme differs from the Gas Retail Contracts Scheme
The Scheme is similar to the Gas Retail Contracts Assessment Scheme. However, it is based on principles rather than more prescriptive benchmarks. This difference recognises that parties to distribution service arrangements are significant commercial entities, better able to negotiate mutually acceptable terms than small consumers can with retailers.
Scheme assessments
The first assessment was conducted in February 2013, and the second in March 2014.
We appointed Elwood Law as the independent assessor for both assessments. Elwood Law is experienced in interpreting contractual arrangements, and has experience in the gas industry, including as the Independent Assessor for our Retail Gas Contracts Oversight Scheme.
In future3, assessments will be conducted on an exceptions basis (as contracts are further revised or replaced).
Key Areas
Elwood Law was appointed to undertake a second assessment of standard gas distribution service agreements against the Principles as at 1 March 2014, and produced the Assessment Report found below. The second assessment found 'Substantial' alignment with the Scheme's Principles, and mirrored the level of alignment attained by the Retail Gas Contracts Oversight Scheme (which improves from 'moderate' alignment in 2010 and 2011, to 'Substantial' alignment with retail contract Benchmarks in 2012).
Related documents
Elwood Law was appointed to undertake the initial assessment of standard gas distribution service agreements against the Principles as at 1 February 2013, and produced the Initial Assessment Report found below.
The date of 1 February 2013 was set by Gas Industry Co as the initial assessment date, after consulting with industry on the time that would be reasonably required to update standard gas distribution contracts. However, as at 1 February 2013, none of the distributors had published a standard gas distribution contract. As a result, technically, as at the assessment date the overall alignment of published standard gas distribution contracts with the Scheme was "Nil" (under the Scheme, "Nil" means "No alignment with the intention of the Principle"). Although there were no distribution issues for gas retailers or consumers, this position confirmed the justification for the Scheme.
Each of the distributors covered by the Scheme was in the process of developing a standard gas distribution contract, which they each call a Gas Use of System Agreement (GUoSA). The review did provide a positive indication that distributors were developing GUoSAs that should broadly align with the Principles. Each distributor planned to have published its standard gas distribution contract prior to the next scheduled assessment date of 1 February 2014.
Related documents
Background
The Gas Distribution Contracts Oversight Scheme (the Scheme) is a non-regulatory gas industry governance arrangement, endorsed by the Minister of Energy and Resources in September 2012.
This section has information on the early development, scope and structure of the Gas Distribution Contracts Oversight Scheme.
The key dates and milestones were:
- In September 2012, the Minister of Energy and Resources endorsed our Recommendation for a voluntary, industry agreed, Gas Distribution Contracts Oversight Scheme.
- In March 2012, the Distribution Contract Principles: proposed design of the assessment framework was released containing both the proposed principles, guiding the content of distribution arrangements, and a draft assessment framework to measure the alignment of arrangements with those principles.
- In June 2011, The Draft Principles for Arrangements on Gas Distribution Systems which proposed a set of Draft Principles and the next steps for developing them was released. The principles aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement.
- In September 2010, we released the Gas Governance Issues in Distribution: Issues Paper after consultation on an initial draft. It proposed a regulatory objective and considered legislative and contracted arrangements relevant to gas distribution.
More information associated with each stage above can be found below under Key areas.
Key areas
On 3 September 2012 the Minister of Energy and Resources wrote to Gas Industry Company endorsing the Recommendation for a voluntary, industry agreed, Gas Distribution Contracts Oversight Scheme.
The Recommendation and Endorsement can be found below.
Related documents
Gas Industry Co progressed the development of the Distribution contracts assessment framework with the completion of the proposed design for assessing the Principles for Arrangements on Gas Distribution Systems.
The Distribution Contract Principles: proposed design of the assessment framework (Distribution Contract Principles) aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement.
The Distribution Contract Principles and feedback received from the industry can be found below.
Related documents
Submissions
A set of draft Principles for Arrangements on Gas Distribution Systems was proposed in the June 2011 Consultation Paper. The principles aimed to improve the contractual arrangements a distributor offers to a retailer under a network services agreement.
The Consultation paper, submissions received and an Analysis of Submissions can be found below.
Related documents
Submissions
In September 2010, following discussion of the initial Draft Principles for Arrangements on Gas Distribution Systems at a workshop in February 2010, we considered whether any issues associated with the distribution of natural gas warrant development of gas governance arrangements in the Gas Governance Issues in Gas Distribution: Issues Paper.
Following an Analysis of Submissions, we advised the Minister on its work related to distribution in December 2010.
The Issues Paper and submissions received, an Analysis of these submissions and the Advice to the Minister can be found below.