Restraint in the face of uncertainty – PIAC submission to IPART’s draft report: Changes in regulated retail gas prices from 1 July 2014

This submission responded to the Independent Pricing and Regulatory Tribunals’ (IPART) Draft Report, Changes in regulated retail gas prices from 1 July 2014. IPART is responsible for setting a voluntary price cap on regulated retail gas prices for the three Standard Retailers in NSW. The Draft Report outlined significant increases in the cap on regulated gas prices over two years. In the submission, PIAC recommended that IPART focus on the objective of protecting consumers from prices that are higher than efficient levels in the short term, rather than setting prices to attract new retailers into the market. PIAC also argued that IPART’s proposal to increase the allowance for wholesale gas costs was premature, as significant uncertainty exists about the timing of these increases. PIAC further questioned the wholesale cost allowance for Origin Energy’s Standing Offer contracts in the Albury/Murray Valley supply area, based on physical constraints in gas transmission pipelines linking Victoria and NSW.