Energy Price Cut Proves Private Better: NSW Govt 1

Thursday, March 12th, 2015
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The NSW government says gas company Jemena’s move to lower charges to customers is proof a privately owned business offers a better service.

Jemena, which distributes gas to 1.2 million NSW households and businesses, has announced new proposed charges it says will save residential customers up to 40 per cent of the network charge part of their gas bill.

The biggest contributor to Jemena’s lower costs is a fall in interest rates, which has reduced the company’s funding costs.

Network charges typically make up about half of a gas bill, with usage charges making up most of the rest.

NSW Resources and Energy Minister Anthony Roberts issued a statement on Tuesday applauding Jemena’s decision to reduce network charges and tying it to the government’s plan to privatise part of the state electricity network.

“Today’s announcement from Jemena is a clear example of a privately-owned business delivering a better service at a lower cost to NSW customers,” Mr Roberts said.

“Here is a private network, operating under the same regulatory regime as the electricity networks, voluntarily cutting their network costs by more than 40 per cent.”

A spokesman for Mr Roberts said the minister was pleased that the company had made the decision to pass on savings on interest costs to customers.

Jemena is awaiting approval of its proposed new charges by the Australian Energy Regulator.

In a draft determination on Jemena’s initial proposal, the AER said that uncertainty around wholesale gas prices made it difficult to indicate whether customers would see a reduction in their total gas bill over the next five years covered by the proposal.


By Peter Trute
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  1. Richard Wiley

    Whilst no doubt the company made this decision entirely according to the best interests of its own shareholders, the timing of this is remarkably convenient for the state government.

    That said, if, as the article says, loose monetary policy represents the primary cause of this reduction, then consumers should of course be aware that this means prices could in theory rise substantially under the privatisation model if monetary policy begins to tighten again.