Natural gas distribution charges set to fall in NSW

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Natural gas customers in New South Wales will save $292 (21 per cent) for a typical household over a five-year period as Jemena proposes cuts to the cost of its gas distribution charges. The savings increase to $460 over five years for regional residential customers, who typically consume more natural gas.

Jemena, which owns and operates the Jemena Gas Network (the largest in Australia, with 1.4 million customers) has written to the Australian Energy Regulator (AER) to recommend a revised cost structure for the next five-year period, 2020-2025.

The revised Jemena Gas Network (JGN) 2020 Plan also proposes a reduction in gas prices for all commercial and industrial customers by, on average, 25 per cent – a saving of $16,296 over five years for a typical large commercial customer.

Jemena’s executive general manager of Gas Distribution, Dr Jennifer Purdie, said the recommended cuts are based on extensive customer engagement.

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“We were pleased the AER’s draft decision recognised the considerable input our customers had in our decision making process and the 2020-2025 price plan submission,” Dr Purdie said.

“Our customers told us they want to pay a fair price for natural gas to cook, heat homes, and for hot water. They also want us to take appropriate action now to respond to uncertainty around the long term future of the gas grid.”

The Jemena Gas Network 2020 Plan was developed during a period of unprecedented change in the Australian energy market. Many of the changes have important implications for customers, and for the business, both in the short and longer term, which is why key focus areas in the JGN 2020 Plan include:

  • driving sustainable cost reductions, without compromising safety or reliability, to put downward pressure on bills;
  • innovating for a lower carbon gas future by readying the network to transport low-carbon gas;
  • delivering balanced outcomes across household and business customers, current and future generations, and city and regional areas of NSW;
  • connecting 135,000 new customers to the network and
  • continuing to promote gas as a competitive fuel choice, which will help to lower bills in the future.

 Planning for the future

“Our customers want to continue to use gas into the future. Our challenge is to manage the current network effectively while taking into consideration issues such as population growth and increased urbanisation,” Dr Purdie said.

“For example, in planning for the new Aerotropolis around Badgery’s Creek airport, we want to ensure trunk pipeline infrastructure can support future demand and growth. It’s not in anyone’s interest to have to expand and extend pipelines retrospectively.

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“Our customers also told us that they expect us, and the energy industry, to innovate and plan for the future so that they can continue to use gas in the longer term, as we move to a lower carbon future. Our Western Sydney Green Gas project is one example of how we are innovating for a greener energy future.”

Jemena now calls on AER and energy retailers to pass on the recommended price reductions to customers. The AER will issue its final decision on April 30, 2020. The new price structure is effective from July 2020.

Gas distribution costs make up approximately 40 per cent of the bill for a typical residential customer.