Appendix: Letter to the Gas Industry
3 May 2000
[Name]
Dear [name]
Gas (Information Disclosure) Regulations
The Government has agreed to a range of amendments to the Gas (Information Disclosure) Regulations 1997. The document attached provides a summary of the changes in disclosure requirements. Revised regulations will be promulgated in the near term.
The changes to disclosure requirements follow extensive consultation. A discussion paper was issued in October 1999 following approaches to the industry in late 1998 seeking advice on possible amendments. Submissions were received and considered in the development of the amendments. In February 2000 a forum was held with company representatives and auditors who actually prepare disclosures. A number of the amendments are as proposed in the discussion paper, but there are also a number of proposals that have been changed or have not proceeded as a result of consultation. The Government took its decision on these proposals in May 2000. A copy of the Minister's media release dated 3 May 2000 is attached for your information.
The following are the key changes:
- A mandatory avoidable cost allocation methodology will apply to all pipeline owners and will be set out in the Gas Information Disclosure Handbook to be issued by the Chief Executive, Ministry of Economic Development.
- A draft copy of this Handbook will be forwarded to you shortly. It will not be possible to finalise the Handbook until the amended regulations are promulgated, but changes are expected to be cosmetic only (confined to cross-references to specific regulations and the like).
- Financial statements prepared in accordance with the Regulations will have to comply with generally accepted accounting practice.
- A mandatory ODV methodology will apply to all pipeline owners. This methodology is to be described in an ODV Handbook to be issued by the Chief Executive, Ministry of Economic Development following consultation with the industry.
- Where information in the financial statements does not comply with the definitions in the financial performance measures, the financial performance measures will need to include certain prescribed adjustments. These adjustments will be detailed in a derivation table in the Regulations.
- Pipeline owners will be required to disclose asset management planning information before the start of the 2001/2002 financial year. The information required to be disclosed will be set out in the Gas Information Disclosure Handbook.
- An extended range of reliability performance measures will need to be disclosed.
- Pipeline owners will be required to publish specific information on the Internet.
- Gas wholesaling and retail businesses will not be subject to the information disclosure regulations.
The proposal to require a common balance date for disclosures by all pipeline owners has been dropped. The existing requirements for disclosure of pipeline charges have also been discontinued.
The new provisions apply to 2000/2001 disclosures. If you have enquiries about the Regulations, please contact Ray Deacon on 04-474 2859. The Ministry's e-mail convention is firstname.lastname@med.govt.nz.
Yours sincerely
Tony Fenwick
Manager
Energy Markets Policy Group
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