The Australian Energy Regulator today issued its final decision for the JGN NSW gas networks access arrangement for the period 1 July 2010 to 30 June 2015.
The AER's role is to assess the proposed access arrangement which sets the terms and conditions of access and tariffs for the JGN NSW gas networks.
This is the first time the AER has made a decision for JGN NSW gas networks. The previous decisions were made by the NSW Independent Pricing and Regulatory Tribunal.
The JGN NSW gas networks provide gas to more than a million customers across Sydney, Newcastle, the Central Coast, Wollongong, and over 20 country centres, including those within the Central Tablelands, Central West, Southern Tablelands and Riverina districts.
The AER has approved gross capital expenditure of $760 million in real terms for the five years 2010 – 2015, representing an increase of 42 per cent over the previous five years, and an operating expenditure of $704 million in real terms, or 8.6 per cent more than the previous five year period.
Acting AER chairman Andrew Reeves said that the higher approved capital expenditure allows for:
- an increase in the number of new connections
- completion of existing projects and projects deferred from the previous period for capacity development of the network
- an upgrade of JGN's IT systems.
The decision also allows for higher operating expenditure to meet the changing market conditions, including the introduction of the short term trading market in NSW.
"The AER has taken into consideration the expenditure needs to meet growth and security of the JGN NSW gas networks, and balanced this with the long term interests of customers," Mr Reeves said.
The final decision is largely in line with the draft decision released in February 2010.
The AER's final decision approves an increase in haulage reference services tariffs of 8 per cent in 2011-12 and an increase in charges for meter data services of 33 per cent in 2011–12. In subsequent years of the access arrangement real haulage reference service tariffs will increase on average by 4.6 per cent (not taking into account any pass through events) and meter data services will increase by inflation.
The average residential gas charge in NSW is around $590 per annum. As network charges make up about 50 per cent of the bill, this will mean an increase for consumers of around 5 per cent or about $28 in 2009-10 and annual increases of around 2.3 per cent or about $16 for the remainder of the period.
The AER expects to publish its access arrangement proposal to give effect to this decision by the end of June 2010.