Jemena has proposed to reduce average network prices for its gas customers in NSW in its Access Arrangement (price review) submission to the Australian Energy Regulator (AER). The submission, recently lodged with the AER, covers the five-year period from 1 July 2015 to 30 June 2020.
If accepted by the AER, the proposal by the Jemena Gas Network will deliver an average “real” price reduction (excluding the impacts of inflation) of up to 20% in the distribution component of the bill over the five years from July 2015.
The prime beneficiaries of this reduction will be the network’s 1.2 million residential customers, who will experience an average real reduction in the distribution component of their retail gas bill of $271 over this period. Distribution charges comprise around half the retail gas bill of an average residential customer.
“In developing the Jemena Gas Network submission for the next price review period, we have taken into account the number one issue facing energy customers in NSW – which is rising retail prices,” says Paul Adams, Jemena’s Managing Director.
“Through our customer engagement activities, customers have told us that they want Jemena to mitigate the impact of future rises in the wholesale price of gas. They have also told us that they value our current safety and service levels.
“We have responded by proposing decreases to our average network prices and doing this in a way that will minimise the retail price increases over the next five years.”
Mr Adams said that in arriving at its proposal to decrease gas network prices, Jemena had actively engaged with its customer base, including large and small business customers, households and retailers. The organisation also held customer focus group meetings in both Sydney and country NSW.
“As one of the most efficient gas networks in the country, we have committed to continued improvements in our productivity and, in our submission to the AER, we have proposed a mechanism to further motivate us to seek these savings and share them with customers.
“In addition, our funding costs have decreased since the end of the global financial crisis and we are committed to passing these savings onto our customers,” he said.
Mr Adams said Jemena is keen to continue lowering average network prices into the next decade.
“However, this will be achieved only if we are able to spread our large fixed costs across an increased number of customers. “To enable Jemena to grow the number of customer sites in NSW, we will need the AER to retain incentives for us to increase gas penetration in this state.
“Continuing to invest in our Natural Gas, the Natural Choice marketing campaign – which promotes the benefits of natural gas and encourages homes and businesses to connect to the gas network in NSW – will play a key role in growing this customer base,” he added.
Responding to customer feedback about the complexity of the energy market, Jemena has simplified its prices and charges and smoothed its proposed annual price changes to minimise the potential for future customer price shocks.
Jemena has also committed to helping vulnerable customers struggling to pay their gas bills, including assisting them to replace old gas appliances with new, more efficient models.
“While Jemena is doing what it can to assist our customers in the environment of rising prices, we consider it time to start the conversation on what can be done to better assist vulnerable customers in managing their energy bills,” Mr Adams said.