ACCC approves GasNet revised access arrangement

The Australian Competition and Consumer Commission today issued its further final decision to approve GasNet's amended revised access arrangement for the Principal Transmission System.

ACCC Commissioner and Australian Energy Regulator* Member, Mr Ed Willett, said GasNet had submitted a revised access arrangement which complied with the requirements of the ACCC's final decision.

"The ACCC's proposed amendments to the access arrangement will result in an initial real average tariff increase from $0.295/GJ to 0.446/GJ for 2008, with an annual real average increase of 2.8 per cent for the majority of tariffs over the access arrangement period.

"This tariff increase reflects additional capital and operating expenditure requirements as well as an increase in the approved rate of return, which has increased due to the higher cost of borrowing, as a result of global credit conditions impacting on the domestic financial market.

"If the original GasNet proposal was accepted in full, the higher approved rate of return would result in a higher real average tariff in 2008 of $0.465/GJ," Mr Willett said.

The revised access arrangement will have effect from 9 July 2008.

*The ACCC is currently the regulator of the Victorian transmission network under the National Gas Code. However, from July 2008 this function will pass to the Australian Energy Regulator. In making this further final decision, the ACCC has been assisted by advice from the AER.

Background

GasNet is part of the APA Group, the owner of the Principal Transmission System (PTS), which is the primary pipeline for the transmission of natural gas at high pressure in Victoria.  Under the market carriage capacity management system operating in Victoria, users currently pay tariffs to both the system owner, GasNet Australia, and the independent system operator, the Victorian Energy Networks Corporation (VENCorp).

The PTS is approximately 1,900 km in length, delivers over 220 petajoules annually and serves approximately 1.4 m residential customers and 45,000 industrial and commercial customers.  The PTS is not a traditional point to point pipeline as there are a number of supply points. The majority of gas is sourced from the Gippsland basin via Longford with increased supply projected from Otway's basin via Port Campbell. In addition, the PTS is connected to the:

• Moomba to Sydney pipeline via the NSW interconnection at Culcairn
• SEA Gas pipeline to South Australia
• Western Underground Gas Storage Facility at Port Campbell
• The VicHub interconnection with the Eastern Gas pipeline
• The Yolla gas fields (BassGas) connection at Pakenham and
• The LNG facility at Dandenong.