On 31 October 2023, we released the final decision of our review of gas distribution network reference tariff variation mechanisms and declining block tariffs.
Having released an issues paper, held a well-attended online public forum and received a material number of thoughtful written submissions, we have concluded that further consultation on these matters is best undertaken in respect of individual distributors, their access arrangements and their jurisdictional stakeholders. We are foregoing a draft decision for this review. This report is our final decision and sets out the outcome of our review.
Background
We determine network tariff structures and tariff levels for gas distribution networks in New South Wales, Victoria, South Australia and the Australian Capital Territory.
Existing price cap tariff variation mechanisms incentivise gas distributors to grow the volume of gas carried by their networks. Similarly, existing declining block tariff structures encourage customers to consume larger volumes of gas. These approaches have benefited gas customers because fixed transport costs have been recovered by distribution networks from a larger volume of throughput. This has equated to lower per unit transport costs being paid by customers.
We undertook this review because of stakeholder feedback in the context of our recent gas distribution access arrangement determinations, the recent announcement by energy ministers that the National Gas Objective will be amended to incorporate an emissions reduction objective, and the establishment by some states and territories of policies encouraging gas customers to switch to electricity.
We reviewed these elements of gas distribution networks for consistency with policy settings at Commonwealth and jurisdictional levels.