THE Independent Pricing and Regulatory Tribunal has proposed an average increase in regulated gas prices in NSW of 17.6 per cent in 2014/15.
In its draft report released today, IPART said from July 1 this year, typical annual gas bills will rise by between $150 and $225 for households, depending on location and usage.
For the first time, IPART is not setting regulated electricity prices, following the NSW government’s decision to deregulate the electricity market.
Queensland gas producers are about to start exporting to Asia, linking prices to the more expensive world market.
Coal seam gas (CSG) operations will supply production and export facilities in Gladstone, which will produce liquefied natural gas (LNG) and ship it overseas.
Asian wholesale prices sit at around $15 a gigajoule, while Australians only pay about $4.
IPART chairman Dr Peter Boxall said prices would rise to meet international markets.
“The ability to export LNG is driving a structural change in eastern Australia’s wholesale gas market, and increasingly domestic gas prices will be influenced by what is happening in world gas markets,” he said.
IPART’s draft report is based on submissions by gas retailers, who argue price rises will ensure ongoing supply is delivered into domestic markets.
Dr Boxall said the price increases are roughly 7 per cent less than gas retailers asked, but they are still significant and represent the State’s third consecutive price rise.
Lock the Gate’s national coordinator Phil Laird said IPART’s report confirmed international markets will influence gas prices, rather than supply availability.
Mr Laird said expanding CSG operations would not bring prices down.
“No amount of CSG drilling in NSW can bring those prices back down now that we are captured by the world trade,” he said.
However, NSW Resources and Energy Minister Anthony Roberts blamed the carbon tax for the proposed price hike.
“If Labor’s Carbon Tax is removed, NSW households and small businesses will see this increase cut by a third.”
Mr Roberts said NSW produces approximately 5pc of its gas and imports the remainder.
Increased “available supply” would put downward pressure on gas prices, he said.
“This is why the NSW government is working with communities and the industry to establish a safe and environmentally sustainable gas supply for NSW residents, businesses and manufacturers,” he said.
IPART’s draft report is available at: ww.ipart.nsw.gov.au
Submissions close on May 21 and new pricing will be in place on July 1.
Mike Foley
Senior journalist for The Land.
Senior journalist for The Land.
