The AER has today published the enforceable undertaking it has agreed to with Jemena Gas Networks (JGN) to govern the setting of gas distribution reference tariffs (and non-price terms and conditions) in NSW for the 12 month period commencing on 1 July 2017.
The undertaking provides for real price reductions of 7 per cent, on average, to JGN’s gas reference tariffs for 2017-18. The AER announced this approach in an open letter it published at the start of May, which was published before the Full Federal Court handed down its decision on the AER’s appeal of the Australian Competition Tribunal’s decision concerning JGN’s allowed revenue for the 2015-2020 period.
For the upcoming 2017-18 year, the recent Court judgement does not impact the reduction in JGN’s tariffs. This reduction in tariffs remains appropriate in order to reduce price volatility over the medium term and irrespective of the Court outcome. The implications of the Court’s decision will take some time to resolve, and to determine the final impact on JGN’s allowed revenue which will affect tariffs in future years.
The AER has today also published JGN’s proposed tariff variation notice, which JGN has submitted in accordance with the undertaking, and which sets out each of JGN’s proposed 2017-18 tariffs. The AER will now assess JGN’s proposed tariffs for compliance against the requirements of the undertaking. The AER expects to complete this compliance assessment soon.