Overview
On 5 May 2023 the AER invited stakeholder feedback on its issues paper, Review of gas distribution network reference tariff variation mechanism and declining block tariffs. Release of this issues paper is the first step in our review of how gas distribution reference tariffs are varied from year to year and their structure.
Public forum
On Thursday 8 June 2023, the AER hosted an online public forum on our Review of gas distribution tariff structures. The forum was held at 9–10:30 am (AEST) via Microsoft Teams and was chaired by AER Deputy Chair, Jim Cox. With over 80 attendees, AER staff presented material from our Issues paper and were joined by a range of external stakeholders from Energy Networks Association, Brotherhood of St Laurence, Public Interest Advocacy Centre and Lighter Footprints who presented their perspectives on the Review. We have published these presentations from the forum. Enquiries should be sent to AERPricing@aer.gov.au.
Background
We determine network tariff structures and tariff levels for gas distribution networks in New South Wales, Victoria, South Australia and the Australian Capital Territory.
Existing price cap tariff variation mechanisms incentivise gas distributors to grow the volume of gas carried by their networks. Similarly, existing declining block tariff structures encourage customers to consume larger volumes of gas. These approaches have benefited gas customers because fixed transport costs have been recovered by distribution networks from a larger volume of throughput. This has equated to lower per unit transport costs being paid by customers.
We are undertaking this review because of stakeholder feedback in the context of our recent gas distribution access arrangement determinations, the recent announcement by energy ministers that the National Gas Objective will be amended to incorporate an emissions reduction objective, and the establishment by some states and territories of policies encouraging gas customers to switch to electricity.
We think it is appropriate to review these elements of gas distribution networks for consistency with policy settings at Commonwealth and jurisdictional levels.