NSW Government to scrutinise regulated retail gas price proposals

NSW Government to scrutinise regulated retail gas price proposals

gasMinister for Resources and Energy Anthony Roberts today said the NSW Government will scrutinise proposed increases in regulated retail gas prices for households and small businesses and make a submission to the Independent Pricing and Regulatory Tribunal (IPART).

IPART is responsible for regulating retail gas prices for those customers who have not entered into a market contract with a gas retailer. These customers represent less than a third of the small gas customers in NSW.

Mr Roberts said IPART must stringently assess any increase for the next financial year after gas retailers AGL, Origin Energy and ActewAGL applied for rises of between 15.9 and 20.3 per cent, or about $3-$4 per week for most customers.

“The NSW Government will examine the retailers’ proposals and their justifications for increasing the regulated price and we will make a submission to IPART,” Mr Roberts said.

“The retailers have highlighted the impact of Labor’s Carbon Tax on gas prices for households and businesses.

“If Labor’s Carbon Tax is removed by 1 July 2014, retailers expect there will be a saving for consumers of between 5 – 9 per cent from their proposed prices.

“According to the retailers, more than half of the proposed gas price increase is due to the wholesale cost of gas, while an increase is being sought due to network charges approved by the Australian Energy Regulator (AER) in 2011.

“The NSW Government is committed to driving down living expenses for households and businesses across the State. We worked hard to rein in electricity prices and stopped $4.3 billion in unnecessary future network expenditure, a cost that would have been passed onto consumers as of 1 July 2014.

“Instead, the networks (Ausgrid, Endeavour Energy and Essential Energy) have submitted prudent investment proposals that will keep their share of customer electricity bill increases to CPI or below.

“Retail gas prices are a greater challenge as NSW only produces around 5 per cent of its own gas.

“This means consumers must pay prices that are being driven higher by increasing Australian demand for gas, a lack of alternative local supplies and the existence of attractive export contracts available to interstate suppliers of gas to NSW.

“NSW yearly demand for gas is 161 petajoules (PJ) but the State only supplies 5.4PJ (or enough for 234,782 Sydney homes) which means we are at the mercy of gas market prices.

“This is why the NSW Government is working with communities and the industry to establish a safe and environmentally sustainable gas supply for NSW residents, businesses and manufacturers.

“This is only the start of the process. IPART must publish an Issues Paper and allow feedback from the public, it will then hold open hearings, release a draft decision and consider subsequent public feedback. A final ruling is expected to be made in June 2014.

“The submissions by AGL, Origin Energy and ActewAGL reflect the regulated price, but I urge gas customers to shop around and examine the deals being offered by other retailers which may be lower.

“To compare offers visit the Australian Energy Regulator (AER) website www.energymadeeasy.gov.au

“In 2013, IPART proposed that the process would be annual due to continued network cost increases and uncertainty about wholesale gas prices which resulted in IPART approving an average 8.5% rise this financial year.

“Last year the NSW Government raised concerns with IPART over proposed gas price increases and supported the proposal of costs being reviewed every year not every three years as IPART had previously done,” Mr Roberts said.

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