Hodgson turns heat on to gas industry

By CHRIS DANIELS energy writer

Trouble is brewing in the gas industry over Government plans to bring in sweeping regulatory powers.

Energy Minister Pete Hodgson is dusting off methods last used to deal with electricity companies, asking the industry to devise its own rules, while building up an arsenal of legal powers to impose his will should self-regulation fail.

Last Wednesday, the industry was given a draft version of laws that one industry executive described as "draconian".

The time allowed for comment has also drawn angry reactions.



The industry has less than a week to make its views known on the plans, which the Government says are "backstop legislation" to be used only if the industry proves it cannot regulate itself.

The electricity industry this year could not agree on a self-regulating structure, so Hodgson is setting up a Crown-appointed board to oversee it.

One senior industry executive said the planned gas legislation was unnecessary and should not be introduced merely because of failures in the electricity industry.

"This is a 'one size fits all' draconian piece of legislation, with no effective consultation, to whack an industry in which there's no evidence of any failure."

He said it was like using a "sledgehammer to crush a walnut - and that's being kind and forgiving".

The industry is expected to complain that such wide-ranging and "overbearing" regulation risks scaring overseas investors, whose money is urgently needed to pay for some of the expensive developments needed in gas exploration, production and pipeline development.

The proposed law is understood to contain sweeping powers over the industry, including price control, that could be implemented at the whim of the Government.

The Gas Industry Steering Group will discuss the proposal at a meeting tomorrow.



In late 2000, Hodgson outlined the approach he would take with the electricity industry:

"It's a case of saying 'you fix it - or we'll fix you'," he said.

"I don't want to use the legislation."

Hodgson said the Government wanted "industry solutions where possible, regulation where necessary".