Australia Consumer Watch: Looming NSW Gas Price Hike Possible to Extend in Other States

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By Esther Tanquintic-Misa | April 24, 2014 1:23 PM EST

Gas prices in New South Wales are set to increase by 17.6 per cent effective July 1, making typical NSW households' gas bills jump between $150 and $225 annually.

The increases, according to Dr Peter Boxall, chairman of the Independent Pricing and Regulatory Tribunal (IPART), were due to the rising prices in the wholesale gas market, which analysts think could extend beyond the other Australian states.

REUTERS
In the latest "Global LNG Market Short and Long Term Outlook: Trends, Drivers and Forecasts of Supply, Demand, Capacity, Trade and Contracts to 2020" by Research and Markets, it said the current supply surplus in the LNG sector will hit the wall in 2014, where demand will exceed supply by 75 million tonnes.

"The ability to export liquid natural gas is driving a structural change in eastern Australia's wholesale gas market, and increasingly domestic gas prices will be influenced by what is happening in world gas markets," Mr Boxall said.

Mr Boxall noted the new LNG export plants in Queensland. The $70 billion Gladstone project is expected to start shipping gas late this year to China.

Gas prices in NSW, between 2006 and 2014, have actually increased by 40 per cent much to the chagrin of households in the state. Over the same period, prices of electricity did a corresponding hike of a whopping more than 80 per cent.

"We're seeing massive increases in gas because suddenly the eastern seaboard is exposed to the global market," NSW Opposition Leader John Robertson said. "That's pushing prices up."

The Australian Industry Group warned prices of gas could hike further not just in NSW alone if gas projects and production continue to face delays.

Production of CSG as well as other unconventional resources need to be expanded "if we are to avert the risk of prices spiking above export parity," AI Group NSW director Mark Goodsell was quoted by The Australian.

The possibility was confirmed by Federal Industry Minister Ian Macfarlane. "Without progress in the CSG industry, this pressure will continue to grow, raising the possibility of further significant price rises for large gas users in particular, including in the manufac­turing sector ... more work is needed to get the industry moving quickly enough to address supply," he said.

An unidentified AGL Energy spokeswoman told SMH that the looming gas increase included the carbon price.

"If the carbon price is removed from 1 July 2014, the increase will be 11.3 per cent instead," she said. "This means a typical residential customer using 23 gigajoules of gas a year, will face an average bill increase of about $2 per week including GST."

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(Photo: REUTERS / )
In the latest "Global LNG Market Short and Long Term Outlook: Trends, Drivers and Forecasts of Supply, Demand, Capacity, Trade and Contracts to 2020" by Research and Markets, it said the current supply surplus in the LNG sector will hit the wall in 2014, where demand will exceed supply by 75 million tonnes.
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