The Australian Energy Regulator has decided against subjecting APA Group's (ASX:APA) South West Queensland Gas Pipeline to full price regulation, finalising a draft decision released in October.
The ruling paves the way for APA Group, Australia's largest natural gas transmitter, to proceed with plans to expand its east coast gas grid.
The proposed expansion aims to enhance the capacity to transport gas southwards from Queensland to New South Wales and Victoria.
AER board member Lynne Gallagher acknowledged concerns about APA's potential market power over services provided on the pipeline.
However, she highlighted the influence of major users and the likelihood of customers substituting services in the future as factors influencing the decision.
"Concerns about investment uncertainty came through loud and clear during the consultation on our draft decision," Gallagher said.
She noted that most stakeholders, including SWQP users, opposed the introduction of scheme regulation during consultations.
While Gallagher observed that APA's prices and returns on the pipeline "appear to be higher than the AER would expect in a workably competitive environment," she emphasised the importance of easing cost pressures, particularly for smaller customers.
The AER plans to closely monitor APA's operations under its expanded gas pipeline monitoring and reporting powers, ensuring services align with market expectations and customer needs.