Distribution, Gas, LNG, Markets, Projects, Technology

Regulated gas price hike confirmed: IPART

Consistent with the draft decisions released for consultation in April, regulated gas prices will increase by an average of 17.8 per cent in 2014/15, with prices relatively stable in 2015/16.

From 1 July 2014, typical annual gas bills will rise by between $155 and $225 for households, depending on where they are located and how much gas they use.

IPART Chairman Dr Peter Boxall said over 100 submissions were received in response to the draft decisions, and these have been considered in setting the final prices.

“We are aware that these increases are significant and acknowledge concerns about affordability. However, as gas starts to be exported from eastern Australia for the first time, the rising costs faced by retailers to supply gas to consumers need to be recouped,”? Dr Boxall said.

“The ability to export LNG is driving a fundamental change in eastern Australia’s wholesale gas market. With gas reserves being directed to these exports, eastern Australia is becoming part of a single global market for commodity gas, and wholesale gas prices are being influenced by international prices.”?

“We have carefully considered the retailers’ proposed prices and have found they are consistent with the efficient costs faced by a new entrant retailer supplying gas to customers – including the wholesale cost of the gas itself which is forecast to rise rapidly – and therefore that they are the right prices to promote competition to protect consumers against unreasonable price increases in the future.”?

Under the final decisions, regulated prices increase by:

  • 18.0% for AGL
  • 17.8% for ActewAGL
  • 14.6% for Origin Energy (Albury/Murray Valley)
  • 18.1% for Origin Energy (Wagga Wagga)

In response to the price increase, the Australian Petroleum Production and Exploration Association (APPEA) Chief Operating Officer – Eastern Region Paul Fennelly said “Gas prices have been lower in eastern Australia for the last 15 years but are now rising due to a range of factors, including increased supply costs and restrictions on the ability of companies to adequately obtain access to resources.

“As demand for any commodity increases, and the cost of producing that commodity increases, so too does the price.

“Industry has long argued that downward pressure cannot be placed on rising gas prices without expanding the natural gas industry in NSW. Yet policy settings that provide certainty for industry to explore and produce natural gas are sadly lacking.

“Natural gas projects underway near Narrabri in the north-west of NSW and Gloucester, in the mid-north coast region, are vital for the supply of natural gas into the NSW domestic market as they would reduce the current heavy reliance on gas imports for 95 per cent of the state’s supply.

“Today’s IPART determination shows that NSW must contribute to the east coast market and get on with developing its natural gas resources, lifting a freeze on exploration and giving urgent consideration to projects that would increase supply.”?

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