Commerce Commission issues final determination on Maui Gas Pipeline Open Access

(LAWFUEL) – The Commerce Commission has today issued the final determination in relation to an application under section 58 of the Commerce Act by two Todd companies in relation to access to the Maui gas pipeline. This is consistent with the Commission’s preliminary view stated in its April draft determination.

The application by Todd Petroleum Mining/Todd Taranaki (Todd) related to certain provisions of the Maui Pipeline Operating Code (MPOC) under which open access to the Maui gas pipeline occurs. Pipeline users who wish to gain access to the pipeline must enter into contracts with its owner, Maui Developments, which contain provisions that are based on the MPOC.

Ms Rebstock noted that the Commission is responsible for deciding whether to authorise Todd’s application. The Commission must first determine whether competition would be lessened by the relevant provisions. If so, the Commission then compares any benefits to the public from the provisions with the detriment arising. If the benefits exceed the detriments, the Commission will grant authorisation.

However, in this case, the Commission’s final determination is that there would be no lessening of competition if the relevant provisions were implemented. That is because, in the Commission’s view, if the provisions in the MPOC were not implemented by the industry, it was likely that the Government, as noted in policy statements on the gas industry, would regulate the implementation of identical provisions to those in the MPOC. Hence the hypothetical position with and without the MPOC provisions would be the same and there would be no lessening of competition when the two were compared. In such a case there is no need for the Commission to compare the benefits with the detriments.

The Commission has therefore determined that authorisation of the relevant provisions in the MPOC is neither required nor is within the Commission’s jurisdiction. As a result it has declined to authorise the provisions.

A copy of the final determination is available on the Commission’s website www.comcom.govt.nz under PublicRegisters / Anti-Competitive Practices – Authorisations

Background

Maui Pipeline Operating Code (MPOC) is a set of rules that regulate open access to the Maui pipeline by producers and shippers of gas. The Maui pipeline transmits gas produced in various gas fields in Taranaki to markets in Auckland, the Waikato, the Bay of Plenty and Gisborne.

Todd’s application was concerned with the provisions in the MPOC that:

§ preserve the existing long-standing rights of the parties to the sale, purchase and delivery of Maui gas; and

§ permit the implementation of a specialised operational gas balancing system for New Zealand’s gas transmission pipelines. The balancing system is necessary to reconcile quantities and values of gas injected into a pipeline system by producers with that extracted by consumers.

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