ACCC To Control Gas Bills

Millions of Victorian gas customers will escape big bill increases next year, after a draft decision on GasNet's transmission tariffs.

GasNet Trust applied to the Australian Competition and Consumer Commission -- the transmission sector's regulator -- to lift tariffs by 38 per cent next year and by an average of 35 per cent over five years.

The ACCC said yesterday it had rejected the application and would allow GasNet, which transported most Victorian gas, to raise tariffs by about 7 per cent.

If approved, the application would have had a big effect on wholesale gas prices and industry costs, as well as being passed on as rising bills for households. In some industries, gas transmission accounts for more than 10 per cent of energy supply costs.

GasNet transports nearly all the gas consumed in Victoria, through its 1930km high-pressure pipe network.

The ACCC has also broken new ground by reducing GasNet's rate of return from 13 per cent across the transmission industry to 11.9 per cent. The trust had sought a rate of return of 14.9 per cent.

The ACCC decided to reduce its industry rate of return because of lower interest rates, and after rejecting an argument that it should be based on the 10-year bond rate, rather than bond yields over the five-year period of the transmission tariff determination.

The ACCC draft would allow GasNet to increase tariffs by about 7 per cent. ACCC chairman Allan Fels said this would allow GasNet to earn a reasonable return on assets.

The draft decision is certain to re-ignite argument within the gas transmission industry that the ACCC is an inappropriate organisation to be its regulator. GasNet chief executive Christine O'Reilly called the decision disappointing. ©

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