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This discussion paper sets out the Ministry of Commerce's ("the Ministry's") proposals for amending the Gas (Information Disclosure) Regulations 1997 ("the Regulations"), and seeks comments on these proposals. The proposals and the rationale are summarised as follows:

• Introduction of a mandatory Avoidable Cost Allocation Methodology (ACAM) for financial separation of transmission, distribution, retailing and wholesaling gas services (see sections 4.1 - 4.4 of this discussion paper).
  This proposal is intended to ensure that financial separation is done in an economically robust and meaningful way, and in a consistent manner.
• Requiring key details of transfer payments to be disclosed (section 4.5).
  This proposal is intended to make transparent transfers amongst pipeline owners' businesses, in order to identify whether transfers are being used to suppress pipeline business profitability and/or to cross-subsidise contestable activities.
• Requiring that key items be individually disclosed in financial statements, in addition to those required by generally accepted accounting practice (GAAP) (section 4.6).
  This proposal is intended to make transparent the way in which financial separation is undertaken, and to assist analysis of pipeline financial performance.
• Requiring financial statements to comply with GAAP (section 4.7).
  GAAP is the authoritative set of rules for accounting purposes in New Zealand. The Ministry considers it sensible to base the regulatory accounts on this firm foundation.
• Introduction of a requirement for financial statements to relate to (a common) year-end of 31 March, and be disclosed no later than 4 months after 31 March (section 4.8).
  This proposal is intended to make inter-company comparisons easier, more accurate, and more timely.
• Introduction of a mandatory Optimised Deprival Valuation (ODV) methodology, to be used for calculating financial performance measures (sections 5.1 - 5.4).
  This proposal is intended to ensure that financial performance measures are calculated in an economically robust and meaningful way, and in a consistent manner. It is also intended to put a cap on asset values, to ensure that disclosed profits are not suppressed by inflated asset values.
• Removal of the requirement for the Natural Gas Corporation (NGC) to disclose wholesale gas contracts (section 6.1).
  The Ministry considers that sufficient competition has developed in the wholesale gas market to make this requirement unnecessary.
• Amendment of the requirement to disclose prescribed agreements, so that separate operating agreements and side contracts are also disclosed (section 6.3).
  This proposal is to ensure all information relevant to prescribed agreements is disclosed.
• Amendment of the pipeline charge methodology disclosure requirements so that key details are disclosed, and so that they are disclosed 20 working days in advance of changes taking effect (section 7.1).
  This proposal is intended to make it easier to scrutinise the reasonableness (in terms of efficiency and equity) of pipeline charges.
• Amendments to the pipeline charge disclosure requirements; in particular, a requirement to disclose changes to pipeline charges 20 working days in advance of their taking effect (section 7.2).
  Various minor amendments are proposed primarily to improve the accessibility of pipeline charge disclosures.
• Introduction of requirements to disclose asset management plans (section 8.1), and service reliability targets (section 8.2).
  These proposals are intended to facilitate scrutiny of whether pipeline owners are providing a secure and reliable service, and will do so in the future.
• Amendments to Maui pipeline disclosure requirements (section 10.1).
  The Ministry considers that this proposal would improve transparency regarding pricing for new contracts.
• Exemption of Nova Gas from all aspects of the Gas (Information Disclosure) Regulations (section 10.2).
  The Ministry considers that Nova Gas does not have market dominance, and therefore that there are no regulatory grounds for requiring it to disclose information.
• Amendment to the pipeline capacity disclosure requirements (section 10.3).
  Various technical amendments are proposed to improve the usefulness of pipeline capacity disclosures.
• Introduction of a requirement to publish various information on the Internet, in addition to publishing in the Gazette and public disclosure (section 10.5).
  The Ministry considers that this will improve the accessibility of publicly disclosed information.

The discussion paper also covers several other minor amendments to the Regulations.

The discussion paper also takes the opportunity to seek the views of interested parties on the effectiveness and value of the gas sector information disclosure regime (section 3.4).

Abbreviations used in this discussion paper: