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Jemena proposes lower network charges to keep gas competitive in NSW

Residential and small business customers on the Jemena gas network in New South Wales can look forward to significantly lower distribution charges on their bills for the next five years, if the Australian Energy Regulator (AER) accepts Jemena’s revised proposal to the price review process.

In its final submission to the AER on prices for 2015-2020, Jemena has proposed to reduce network charges over that period for its 1.2 million residential and small business gas customers by up to 40 per cent in real terms.

Jemena MD Paul Adams said the company understood customers were concerned about the impact of higher wholesale gas prices, and had proposed a price path to reduce the distribution component of bills over the next five years.

“If the AER accepts our proposal, a typical residential customer would save around $563 over this period,” he said.

“We want more customers in NSW to enjoy the benefits of gas for cooking, heating and hot water, so we’re keeping our distribution costs as low as possible.

“By smoothing annual prices changes over the next five years, we can help minimise any bill shock from higher wholesale prices and keep gas a competitive energy choice in NSW.”

However, Mr Adams said gas supplies could become less reliable in NSW if the AER stood by its draft determination to reduce Jemena’s funding for maintenance and repairs for the next five years.

Mr Adams said the AER had underestimated the real costs of delivering a quality gas supply and did not adequately acknowledge the value customers placed on safety and reliability.

He urged the regulator to reconsider cutting funding for capital works and maintenance over the 2015-20 period, saying it could make outages and gas leaks more likely.

“From extensive consultation and engagement with our customers, we know they regard safety and reliability very highly. Our customers expect us to manage our network to minimise any interruptions to their supply, take action to reduce any hazards and keep gas affordable by prudently managing our assets,” Mr Adams said.

“If implemented, the AER’s draft determination could jeopardise the safe, reliable level of service our customers expect and deserve. We would not have sufficient funding to operate and maintain the network to the current standard and finance expansion and improvements for the future.

“With wholesale gas prices rising and putting pressure on gas consumption, it doesn’t make sense for us to invest unwisely in our network assets. We have to make smart, efficient decisions so we can continue to deliver a competitive, value for money service to customers.”