Gas suppliers to smooth out prices

Electricity and gas prices can have a significant impact on your household's bottom line. While making efforts to cut down on your usage can be beneficial, it's still important to keep across what external developments could influence gas prices.

Gas suppliers are at the centre of this. Operating costs can make up a large proportion of the charges you pay on your gas connection, but one supplier in New South Wales has proposed lower network charges to bring down the costs for consumers. 

New South Wales energy distributor Jemena announced in a March 3 statement that residential customers and small businesses connected to their gas network can look forward to slashed energy bills in the coming months. Jemena outlined changes to how it sets prices in a proposal put forward to the Australian Energy Regulator (AER), expressing its plans to cut network charges by up to 40 per cent. 

"If the AER accepts our proposal, a typical residential customer would save around $563 over this period," said Jemena's Managing Director Paul Adams.

"By smoothing annual prices changes over the next five years, we can help minimise any bill shock from higher wholesale prices and keep gas a competitive energy choice in NSW."

However, natural gas distribution comes at a substantial price, including the maintenance of thousands of kilometres of covered pipeline. The AER says distributor network charges can account for around 50 per cent of consumers' final bill, but its Better Regulation reform encourages gas and electricity suppliers to review how efficiently they operate. Jemena's proposal is a reflection of this process, but Paul Adams also said the AER has underestimated the actual costs of supplying gas to consumers.

"With wholesale gas prices rising and putting pressure on gas consumption, it doesn't make sense for us to invest unwisely in our network assets," he said. 

Changing times

The gas industry is undergoing extensive changes. In its report released in October 2014, Gas at the Crossroads, the Grattan Institute said gas producers across the country - particularly in Queensland - are moving towards gas exportation overseas. This has extensive benefits for the economy, but it could also see domestic wholesale gas prices rise in order to compete with international suppliers. The report noted that there has already been 36 per cent rise in the average gas bill over the past five years, and this could soar further still.

"As a result, many households will reconsider the benefits of gas against electricity," it said.

"Business gas users may be able to pass costs onto customers, or be forced to consider alternative energy sources."

This highlights the importance of using a switching service like Make It Cheaper. Comparing competing prices of gas can be confusing, but Make It Cheaper makes the process much simpler by taking your current costs and long term goals into account to find a solution to suit your needs. 

Posted by Richard West