THE INDEPENDENT Pricing and Regulatory Tribunal (IPART) has determined that New South Wales gas prices will jump by more than 17 per cent from July, a move consistent with the Australian Petroleum Production and Exploration Association’s predictions made two years ago.
In June, the IPART’s final decisions on average regulated retail gas prices for 2014-2016 were predominately in line with the draft decisions released for consultation in April.
While regulated gas prices will increase by an average of 17.8% in 2014-2015, prices will be relatively stable from 2015-2016.
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 Peter Boxall said the ability of eastern Australia to export liquefied natural gas for the first time was driving a fundamental change in its 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,” Dr Boxall said.
“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.”
APPEA eastern region chief operating officer Paul Fennelly said increased supply costs and restrictions on the ability of companies to adequately obtain access to resources meant the only way for gas prices in eastern Australia to go was up.
“Industry has long argued that downward pressure cannot be placed on rising gas prices without expanding the natural gas industry in NSW,” he said.
“Yet policy settings that provide certainty for industry to explore and produce natural gas are sadly lacking.”
Mr Fennelly said natural gas project developments taking place near Narrabri were vital for 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,” he said.
The forecast increase in gas prices will apply only to the 25% of small gas consumers who remain on a regulated tariff.
To address affordability concerns, as part of its final report, IPART has recommended a review of NSW Government rebates to ensure that they are appropriately targeted to assist the most vulnerable customers.