The Kalgoorlie to Kambalda Pipeline (KKP) is a transmission pipeline which transports gas from Kalgoorlie to Kambalda in Western Australia. The KKP comprises 44 kilometers of pipeline and ancillary assets, with a capacity of 26 TJ/day. The KKP currently provides a firm forward haul service, which is a service where the pipeline operator commits to receive and deliver a specified quantity of gas for a user. The KKP is currently operated by Southern Cross Pipelines Australia Pty Ltd (a wholly owned subsidiary within the APA Group).
On 22 April 2010 the National Competition Council received an application for the light regulation of the covered KKP. The Council has the responsibility of deciding whether or not to make a light regulation determination in respect of a covered pipeline in Western Australia.
On 29 June 2010 the Council released its final determination and statement of reasons in favour of light regulation of the KKP. The determination came into effect on 28 August 2010 (60 days following the release of the final decision).
Light regulation involves regulatory methods that do not control prices directly, but emphasise commercial negotiation and information transparency, with regulatory intervention through the right to the arbitration of disputes.
A less intrusive form of regulation is considered to be appropriate where the market power exercised by the provider is less substantial and there is the potential for contestability for the services to emerge. It may also be appropriate where the number of access seekers is relatively small and these parties can themselves exercise some countervailing market power in the course of commercial negotiations. Further, light regulation may be an appropriate option for regulation where particular assets are in a transition towards effective competition.
On 1 October 2010, the ERA wrote to the operator of the KKP and noted that it must publish on its website the prices and the terms and conditions on offer for light regulation services. The ERA required the operator of the KKP to report annually to the ERA regarding access negotiations for light regulated services.
Prior to the National Competition Council determination on light regulation of the Kalgoorlie to Kambalda Gas Pipeline (KKP), the ERA granted Southern Cross Pipelines Australia Pty Ltd, as the owner and operator of the KKP, a number of extension of time to lodge a proposed access arrangement.