Australia’s natural gas distribution networks play a critical role within the Australian economy by providing energy to over 4.3 million households and 130,000 businesses.
The domestic natural gas network sector operates approximately $9 Billion worth of assets including over 88,000 Km of distribution pipelines. This long life infrastructure is supported by investment in infrastructure, technology development, training, management and safety systems. The sector directly and indirectly employs an estimated 2811 staff who work with gas transmission operators, plumbers, retailers and installers to ensure a continuous and safe supply of energy to Australian businesses and households.
Domestic natural gas networks are governed by the National Gas Law and Rules administered by the Australian Energy Regulator (AER) in eastern Australia, and the Economic Regulation Authority (ERA) in Western Australia. These regulators set the reference tariffs for gas distributors.
Natural gas distribution networks in Australia face challenges from aging infrastructure, predicted lack of gas supply, particularly in NSW, and rising wholesale gas prices.
In the medium to longer term the greatest opportunity to increase the volume of gas supplied through existing natural gas networks is to increase the number of vehicles powered by Compressed Natural Gas (CNG) and to utilise the potential of distributed gas power generation to provide back up for other forms of embedded generation. Energy Networks is working with stakeholders, including governments, on the removal of the technical and commercial barriers for these technologies which can deliver lower greenhouse gas emissions. Energy Networks is also working with Regulators and Standards bodies to develop evidence based regulation that ensures natural gas is delivered safely to Australia homes and businesses.
A level playing field for gas
The increased use of natural gas within the Australian domestic energy market provides a genuine opportunity to reduce the carbon intensity of energy consumed by Australian businesses and households.
One immediate measure proposed by the Energy Networks is for policy settings to be changed so that gas competes on a level playing field in the residential hot water heating market. This policy change could reduce greenhouse gas emissions by more than 50 million tonnes over the next decade and moderate the expected impact of rising wholesale gas prices.
There are a range of physical and commercial factors which influence the final bills for the more than 4.3 million households and 130,000 businesses gas customers in Australia, including the cost of exploration, production and transportation of the natural gas to the consumer.
With increasing pressure on the fundamental cost inputs to Australian gas markets, it is essential that Governments remove unnecessary distortionary policy settings which threaten to increase prices to Australian gas consumers.
There is an opportunity for the Australian Government to take action that is in the long term interests of consumers, and which has the potential to reduce gas retail prices by 3.5% below CPI by 2034, without compromising Australia’s international commitment to reducing greenhouse gas emissions.
The abolition of the Small-scale Renewable Energy Scheme or the removal of displacement technologies from the scheme would return a level playing field to downstream appliance markets for hot water systems. With over 2 million small scale renewable energy installations already, it is clear that the Australian solar industry is no longer at a stage where it requires government mandated subsidies that distort the market for other competitive technologies .
Rather than provide incentives for specific greenhouse gas abatement technologies, the Energy Networks has made a number of submissions to Government in support of measures that encourage the deployment of fuel neutral greenhouse gas abatement technologies under the Emissions Reduction Fund (ERF).
- ENA Factsheet: Taking the Pressure of Gas Prices: Fixing Australia’s energy policy distortion, September 2014
- Core Energy Group Report: ENA | Gas Network Sector Study, August 2014
- Reducing emissions from residential hot water heating
- NSW Gas Network Code review 17 November, 2014
- Emissions Reduction Fund Exposure Draft Legislation 23 May, 2014
- Eastern Australian Domestic Gas Market Study 7 February, 2014