New tariff approval

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The Australian Energy Regulator (AER) has published its approval of network tariff variation notices, finding each pipeline’s proposed reference tariffs to be compliant.

The notices were from New South Wales gas distributor Jemena Gas Networks (JGN) and New South Wales gas distributor and transmission pipeline Central Ranges Pipeline.

The AER’s role is to assess each pipeline’s proposed changes to reference tariffs for compliance with the price controls set out in its overarching access arrangement. In the case of JGN, where the Australian Competition Tribunal has set aside the AER’s decision on JGN’s access arrangement, the AER has assessed JGN’s proposed reference tariffs for compliance with the enforceable undertaking the AER and JGN have entered into.

The AER has found each pipeline’s proposed reference tariffs for 1 July 2018 to be compliant. The AER has approved:

  • JGN’s reference tariffs, on average, changing by the rate of inflation minus an ‘X factor’ of 5.4 per cent. This results in a decrease in JGN’s reference tariffs, on average, of 3.6 per cent. Most of this decrease will flow through to residential and small business customers.
  • Central Ranges’ reference tariffs increasing by the rate of inflation. This is in line with Central Ranges’ ten year access arrangement, where reference tariffs are allowed to increase by inflation each year. This is the final year of Central Ranges’ current access arrangement.

Assuming all other factors remain constant, the AER estimates the change in tariffs in NSW would increase the annual retail bill of a typical residential gas customer in Central Ranges’ distribution area (Hunter Valley region) by $1. It would also decrease the annual retail bill of a typical residential gas customer in JGN’s distribution area by $8.

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