Published
11 September 2002
Ministers
Government brings cheaper gas to consumers and small business and encourages competition
11/09/02 A State Government agreement with AlintaGas, released today, will hold down the price of gas to Western Australian households and facilitate practical competition in the gas market.
11/09/02
A State Government agreement with AlintaGas, released today, will hold down the price of gas to Western Australian households and facilitate practical competition in the gas market.
Energy Minister Eric Ripper said under the agreement household gas price increases would be capped at the Consumer Price Index (CPI).
The last Coalition government put in place a system where prices could be raised by CPI plus two per cent.
The new pricing system will apply from July 1 next year.
Mr Ripper said also the tariff cap for small business would be reintroduced. Under arrangements put in place by the Coalition government, the cap was abolished on July 1 this year.
"These changes will see cumulatively lower residential tariff caps in the future than would have applied and that the interests of the small business sector are also being protected," he said.
The AlintaGas agreement paves the way for expanded competition to give residential and small business consumers a choice in gas supplier.
Central to the agreement is the amendment to a moratorium that currently prohibits Western Power from entering the residential gas market.
The change will prohibit the entry of Western Power into the market to provide gas to customers using less than one terajoule per annum until there is full retail competition in the electricity market.
However, Western Power can enter the market from October next year for customers using more than one terajoule per annum.
During 2006, the proposed Economic Regulation Authority may review the Western Power moratorium on entering the small gas user market.
Mr Ripper said the State Government had also reserved its right to end the moratorium from July 2007.
"We believe that these moratorium changes will encourage new gas suppliers to enter our residential and small business gas market," he said.
Gas suppliers involved in the current gas deregulation process include Origin, AGL, CMS Energy and Wesfarmers.
"The changes will also ensure competitive neutrality by preventing a situation where only one retailer has the opportunity to provide both gas and electricity to the small-use customer end of the market.
"With a competitive gas retail market, consumers will be able to choose the gas supplier that best suits their needs. Competition is likely to put downward pressure on prices, maximise efficiency and improve service delivery."
Under the agreement AlintaGas will fund the establishment of the Retail Market Operator for the gas market.
It will also provide a financial guarantee (capped at $10million) to the extent necessary to enable the Retail Market Operator to contract for the Retail Market Information System that will enable and support full gas competition.
"The agreement with AlintaGas not only provides potential benefits to gas customers in the short term, but achieves greater certainty regarding the introduction of retail competition in the gas market," Mr Ripper said.
Key aspects of the agreement reached with AlintaGas are attached.
Minister's office: 9222 8788
Arrangements to Introduce Full Retail Contestability into WA Gas and Electricity Markets
Key Points:
1. The Government will fund the development of the market rules for gas full retail contestability (FRC) that form the basis of the funcational specificiation for the tender of the Retail Market Information System, and not seek to recover this funding from participants in the gas market.
2. AlintaGas will fund the establishment of the Retail Market Operator, and will provide a financial guarantee (capped at $10million and to be phased out once the Retail Market Operator is operating effectively and is financially sound) to the extent necessary to enable the Retail Market Operator to:
- fund the development of a load profiling arrangement and functional specification for the Retail Market Information System that reflects the market rules;
- enter into a contract for the provision of the Retail Market Information System to the Retail Market Operator; and
- commence business.
3. The gas retail tariff cap (for all three licence areas - Coastal, Kalgoorlie and Albany) will be revised and based on AlintaGas' tariffs as at July 1, 2002 and will be escalated annually from July 1, 2003 at CPI. Tariff caps will apply to residential and non-residential small-use customers. However, the third step of the tariff cap for residential customers in the South-West Coastal Area will be permitted to rise at CPI plus two per cent.
4. The moratorium on Western Power will be varied so that it will not sell or supply gas within all three licence areas other than as follows:
- from October 17, 2003, to any single site that consumes more than 1 TJ per annum;
- from the date of practical FRC in electricity in the South-West Interconnected System, all customers; and
- from July 1, 2007, the Government, following a review by the proposed Economic Regulation Authority, may consider changing the moratorium then on Western Power to permit it to sell or supply gas to more or all customers.
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