Alinta plays lone hand on gas

SMALL gas users face little prospect of change in the choice of supplier despite Western Australia’s market having opened to full competition on May 31.

The gas market deregulation now allows small business and residential customers – those using less than one terajoule a year, or about 490,000 users – to choose their gas supplier. The deregulation also brings a gas industry ombudsman, a gas marketing code of conduct and regulations for standard form contracts.

However, most companies likely to enter the WA small user gas market are only interested in doing so if WA’s electricity market is also fully deregulated – something not likely to happen until after the next State election.

This is good news for Alinta, which drew a considerable results boost from the WA residential market last year thanks to a colder-than-average winter.

Alinta seems likely to remain the only retailer selling gas in WA to small use customers for some time.

Alinta CEO Bob Browning made reference to the changing market structure and plans to prepare for competition when Alinta announced its results earlier this year.

However, a company spokesman admitted it seemed unlikely any other companies would enter the market in the near future.

As part of the deregulation the systems being put in place to manage the market will be mirrored in South Australia, meaning a gas retailer in WA will have relatively easy access to that State’s market and its 370,000 customers.

The Alinta spokesman said the company had no immediate plans to expand its gas retailing business into SA.

Alinta’s nearest competitor, Western Power, which has the back office systems to mount a realistic challenge, is prohibited from entering the fully deregulated market until January 2007.

The other players thought to be potential competitors – CMS, Origin, AGL, Wesfarmers Kleenheat and TXU – have all indicated that they are not prepared to enter the lower end of WA’s gas market.

Most players say there is not enough money in it for them.

In AGL, TXU and Origin’s cases the value is in dual-fuel contracts – supplying both electricity and gas to small use customers. They are major players in the eastern States gas and electricity markets.

CMS manager of operations David King said the company had about 50 large-use customers and was happy to stay at that end of the market.

“We’re not set up to get down to those sort of [small use] levels,” he said.

One other issue that has been mentioned as a concern is the fact that any new entrant to Perth’s residential gas market will have to share commercially sensitive information with Alinta Gas Networks, the controller of the city’s reticulated gas system.

AGN is part of Alinta Gas, although strong ring fencing has been put in place.

However REMCo, a body set up by Alinta, AGL, Envestra, Origin and TXU, will be receiving that commercially sensitive information when the transitional rules cease at the end of June.