Energy experts at the Justice and Equity Centre acknowledge the Australian Energy Market Commission’s (AMEC) release of its Gas Networks in Transition Draft Determination. This is another step toward gas rules that are fit to manage an efficient energy transition.
JEC’s Energy and Water Justice team proposed a set of rule changes alongside Energy Consumers Australia (ECA), designed to manage the decline of the gas network so it is fairer for consumers.
While the draft determination recognises the declining role of gas networks, it includes measures that will prolong that decline. Proposals on accelerated depreciation and cost sharing would exacerbate inequities consumers are facing today.
Comments attributable to Energy and Water Justice Director Douglas McCloskey:
‘We initiated this rule change process with Energy Consumers Australia (ECA) to respond to the fundamental unfitness of the gas rules. There is an opportunity for reform to ensure a fairer transition for consumers – but the draft determination misses the mark in key areas.
We’re pleased there’s been progress, including in the measures requiring longer term planning and more robust consideration of declining demand. Tighter regulation is needed to ensure gas networks are proactively planning for the efficient retreat of their networks. Without regulatory reform, consumers will be left covering the cost of a network that is increasingly uneconomic to maintain.’
‘While we welcome the new pathway for the regulator to determine partial redundancy of gas networks, we are concerned the Commission intends this to be a last resort. The draft puts the focus on extending business’s opportunity to recover more from consumers through accelerated depreciation and inflation changes. Worryingly, it would also constrain the regulator’s ability to protect consumers from unfair costs.
‘When many people have no choice but to stay connected to gas, it is unfair to increase costs to consumers now, to avoid a hypothetical future of ‘unsustainable prices’.
‘We acknowledge regulatory changes alone can’t solve the problem. And we agree with the AEMC that governments must play a crucial role in helping manage the decline of the network going forward. We’re calling for stronger recommendations in the final determination to more clearly define the action required.’
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