24/01/2020 - 14:01

$241m saving for gas users

24/01/2020 - 14:01

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Domestic gas users will benefit by as much as $241 million over five years under Australian Gas Infrastructure Group’s latest pricing proposal for the Dampier to Bunbury Natural Gas Pipeline.

$241m saving for gas users
A compression station along the Dampier to Bunbury Pipeline route. Photo: AGIG

Domestic gas users will benefit by as much as $241 million over five years under Australian Gas Infrastructure Group’s latest pricing proposal for the Dampier to Bunbury Natural Gas Pipeline.

Utility operators such as AGIG submit revenue and cost proposals to the Economic Regulation Authority for approval, with the latest deal to operate from January 2021 until 2025.

The ERA will have an opportunity to put further downward pressure on costs by amending the proposal.

AGIG's chief executive Ben Wilson said the company would propose a $53 million cut in its spending, or about 8 per cent, and a $241 million cut in revenue, or about 13 per cent..

"Our customers told us that the cost and the reliability of our service are fundamental. AGIG’s success in operating the pipeline has not required any curtailments of capacity for more than 10 years," he said. 

"Over the five-year period, we will deliver a standalone communications infrastructure for the northern section of the pipeline, and replace 25 control systems on compressor units and gas engines. 

“These initiatives will further ensure the reliability of the pipeline and confirm AGIG’s ability to meet our customers’ needs.

“With interest rates at historic lows, our financing costs have also reduced.

“This is a key driver of the reduction in revenue of $241 million and the benefits of this have been passed on to customers.”

The previous ERA pricing decision for the pipeline had led to a dispute between the two parties, with AGIG taking the decision to the Australian Competition Tribunal.

The tribunal dismissed the appeal in July 2018, and the decision meant the pricing arrangement for 2016 to 2020 cost users $200 million less than otherwise.

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