Aussie pipeline king gets plaints over monopoly prices

Bloomberg 

After a decade of unrivaled expansion, Australia’s largest gas-pipeline owner is facing growing pains.
Complaints from industrial gas users, frustrated by supply shortages and hefty price spikes following the start of Queensland’s liquefied natural gas export plants, sparked a regulatory review last year aimed at boosting competition in the eastern seaboard market.
APA Group Ltd. is now looming as a potential casualty of that probe. The Australian Competition and Consumer Commission raised questions in April about monopoly pricing among pipeline operators which it said may have contributed to gas shortages and higher prices in the eastern Australian market. A government appointed expert, Dr. Michael Vertigan, will on Friday start weighing industry submissions ahead of a recommendation to be delivered to the Australian government in December.
APA Chief Executive Office Mick McCormack rejects the ACCC’s assessment and says greater regulation will deal the industry an even worse hand by stifling new investment.

Grid Building
“Show me a regulated piece of infrastructure and I’ll show you no incentive to invest,” McCormack said in an interview with Bloomberg prior to its submission to Vertigan on Thursday. “What we’ve done is unparalleled on the planet. No one else has got an east coast grid. We have spent A$12 billion ($9.2 billion) putting it together.”
APA Group has grown from a market capitalization of A$1 billion a decade ago to a company whose value topped A$10 billion this year after building a vast pipeline grid delivering gas in most Australian states. The company carries more than half the nation’s gas after building up its fast-growing portfolio with deals such as the $5 billion purchase of BG Group’s LNG pipeline in Queensland state. APA Group fell 0.3 percent to close at A$8.09, while the benchmark S&P/ASX 200 lost 0.2 percent.
McCormack said the company has helped grow Australia’s gas infrastructure to its current level and isn’t making excessive profits.

Prices Surge
“We’re in a position where you would think we had destroyed the Australian economy,” he said. “But just get out a calculator. We’re making about 8 percent on our assets. Is that monopoly returns?”
McCormack disagrees there’s a gas shortage on Australia’s east coast while saying Queensland’s A$70 billion LNG
export industry has led to higher prices for domestic users. Spot natural gas in Brisbane, the capital city of Queensland, rose to an average of A$10.33 a gigajoule in July, up from A$5.16 the year before, according to the Australian Energy
Market Operator. Prices have averaged A$5.95 in October.