The Australian Energy Regulator (AER) has released a draft decision on the 2023−28 gas access arrangement variation proposal from AusNet Gas Services (AusNet).
Draft decision
After receiving a proposal from AusNet to vary its approved 2023–28 gas access arrangement on 30 September 2024, our draft decision is to not accept AusNet’s variation proposal. We consider:
- AusNet has not justified its proposal to recover more accelerated depreciation from customers during the 2023−28 access arrangement period.
- The impacts of Victorian policy and regulatory changes on residential demand will accrue more slowly than AusNet has forecast, consequently we consider changes to AusNet’s approved capital expenditure funding are not required.
- AusNet’s proposed changes to its approved operating expenditure are unnecessary because the approved access arrangement already appropriately caters for Energy Safe Victoria (ESV) levies, abolishment costs and the rate of change.
Background
In June 2023 we released our final decision on AusNet’s 2023−28 gas access arrangement proposal.
Our final decision granted AusNet $105 million in accelerated depreciation, to be recovered from customers over the 5-year period. AusNet had proposed $200 million in accelerated depreciation.
On 30 September 2024, AusNet submitted a proposal to vary its approved 2023–28 access arrangement. AusNet proposed to increase its approved accelerated depreciation from $105 million to $175 million.
As the rationale for its variation proposal, AusNet referenced policy and regulatory changes in Victoria such as the prohibition on new connections requiring development approval, the requirement to charge connection fees to those customers who do connect, and consultation on potential bans on new gas appliances.
AusNet commented that these changes have increased its risk of being unable to recover the cost of its investments, known as asset stranding. AusNet also submitted that bringing forward its asset cost recovery could ease future price rises as cost recovery in future would likely fall on a smaller number of customers connected to its network.
Having published AusNet’s variation proposal and received 13 written submissions, we have now made our draft decision.
Call for submissions
AusNet has until 14 March to respond to our draft decision with a revised proposal. Interested stakeholders are invited to provide submissions on the draft decision and a potential AusNet revised proposal by Friday, 11 April 2025. Submissions and requests to make a submission via alternative methods should be sent to: VicGAAR2023
aer [dot] gov [dot] au (VicGAAR2023[at]aer[dot]gov[dot]au)
The AER’s final decision will be made in mid-May 2025.