Tasmanian households face 30 per cent gas price hike, consultant says

Tasmanian households face 30 per cent gas price hike, consultant says

Wholesale gas prices in Tasmania could almost double within three years, with domestic users facing a retail price hike of about 30 per cent, an energy consultant says.

The latest research by ANZ shows household gas prices will soon surge in Victoria by 30 per cent, with the price rise also having the potential to send parts of Australia’s already struggling industrial sectors out of business.

Marc White from Goanna Energy told 936 ABC Hobart that projections, including the latest ANZ report, predicted the current price for wholesale energy of $4.50 per gigajoule now could reach $7 to $13 in the next three to five years.

Mr White said that was the price commercial users paid, but Tasmanian households and businesses certainly faced the 30 per cent increase predicted for Victorian households in the next four years.

The gas price can be broken into energy, transmission and distribution components.

Mr White said on the basis of the wholesale price, residential consumers paying 31 cents a megajoule now would be facing a rise in the energy component of about five cents to seven to nine cents.

“The impact on residential and small business consumers is certainly less than what the industrial consumers are facing,” he said.

Mr White said the 30 per cent hit predicted for Victorians could hit Tasmania because the local distribution network costs could be expected to rise along with the consumer price index (CPI), but transmission prices had doubled over the past two years.

He said the energy component was also now predicted to break above the CPI path and go above.

Mr White said Australia was the victim of a volatile gas market.

“The east coast of Australia is part of the global energy market,” he said.

“We are now connected through the liquefied natural gas [LNG] trains to the global natural gas markets.

“Also we have issues with supply and demand in filling those LNG trains.

“There’s been delays in NSW and Victoria on new gas developments and that’s feeding into the volatility that we’re seeing at the moment in the supply and demand.

“And of course the contract market looks to that short-term volatility and prices in the volume of those steady contracts.”

Mr White said the biggest Tasmanian commercial gas consumers, including the Tamar Valley Power Station , Grange Resources and Nyrstar, would be looking at what happens to their pricing by 2017, which could be as high as $13 per gigajoule.

He also said the choice for households as to choosing gas as opposed to electricity for heating or cooking would become more complicated as electricity suppliers reviewed their tariffs over time, possibly making some more expensive, and gas suppliers reacting.

The latest research by ANZ also found LNG exports were likely to triple over the next five years, and Australia would rival Qatar as the world’s largest producer of the resource by 2018.

That export demand will feed through to households because prices that have previously been determined by domestic demand will now be subject to global forces, Mr White said.



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