WA gas tariff to rise by 23% next week

26/06/2009 - 09:27

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The state government has accepted Alinta's proposal to increase the cap for gas tariffs by 23 per cent, as the gas retailer seeks to recover some of its costs from the impact of the Varanus Island gas explosion.

WA gas tariff to rise by 23% next week

The state government has accepted Alinta's proposal to increase the cap for gas tariffs by 23 per cent, as the gas retailer seeks to recover some of its costs from the impact of the Varanus Island gas explosion.

The price increase come into effect next week for residential and small business customers in the Mid West, South West, Kalgoorlie-Boulder and Albany regions.

The average 'medium' sized bill for a three-month period will increase from $97 to $119, Alinta said in a statement.

The increase follows an interim report by the Office of Energy which concluded that existing tariffs did not reflect the true costs of supply gas.

"The previous government announced it had approved a proposal to increase the gas tariff caps from July 1, 2008, but these were simply not enough to cover the efficient cost of supply," Energy Minister Peter Collier said.

"As a result, this Government has been left with the difficult decision of accepting Alinta's proposal for increases to its charges."

The state government has also agreed that for the 2010 financial year, there would be a further small increase in gas tariffs to allow Alinta to recover a portion of the additional costs incurred from the Varanus Island gas explosion last year.

The explosion cut a third of the state's gas supply and wreaked havoc on industries and businesses.

The Office of Energy is still to complete its more detailed review, which would examine future requirements to move the tariff caps to reach cost reflective levels.

The gas price increase follows an electricity price hike in April, where household bills rose by 10 per cent, small business experienced a 5 per cent rise and bigger businesses had a 10 per cent lift.

 

 

Announcements from Peter Collier and Alinta are below:

 

 

The State Government has accepted Alinta's proposal to raise the cap for gas tariffs.

Energy Minister Peter Collier said Alinta sought endorsement from the Government to increase the cap for residential and small business customers in its supply areas of the Mid-West/ South-West, Kalgoorlie-Boulder and Albany regions.

Alinta made the case that changes to the retail tariff cap were needed to ensure householders and businesses were provided with reliable and sustainable gas supplies in the longer term.

The tariff cap increases were a recommendation of an interim review undertaken by the Office of Energy (OOE) ahead of the completion of the Gas Tariffs Review, established by the previous government.

Recovering costs associated with the Varanus Island gas disruption last year formed part of Alinta's case for the increase.

Alinta's submission was assessed by the OOE and independently verified by economic consultant, ACIL Tasman.

Mr Collier said the OOE was still to complete its more detailed review, which would examine future requirements to move the tariff caps to reach cost reflective levels.

"The previous government announced it had approved a proposal to increase the gas tariff caps from July 1, 2008, but these were simply not enough to cover the efficient cost of supply," he said.

"As a result, this Government has been left with the difficult decision of accepting Alinta's proposal for increases to its charges.

"We are aware of the financial pressure householders and businesses are already under and to this end, Alinta offers assistance to customers in hardship.

"It is important that tariffs reflect the cost of supply, not only to enable existing retailers to recover costs but to also encourage competition between retailers, which would have the potential to drive prices down."

 

ALINTA

The State Government has approved Alinta's proposal for an increase in gas tariffs.

The cost of supplying gas to the end customer has increased significantly in the last few years, and the Office of Energy's Further Interim Report concluded that existing gas tariffs did not reflect the true costs of supplying gas.

Due to the explosion at the Varanus Island gas processing facility in June 2008, the State Government has also agreed that for 2009-10 only, there should be a further small increase in gas tariffs to allow Alinta to recover a portion of the additional costs that were incurred in maintaining gas supplies to tariff customers during this time.

Alinta General Manager Retail Sales, Ralph Bates said the changes to tariffs were likely to see a typical household's gas bill increase by $1.70 per week.

"While price increases are never welcome, Alinta is committed to ensuring that customers who are experiencing payment difficulties or genuine financial hardship are supported and assisted."

In addition, the Gas Customer Code, which takes effect on 1 July 2009 further ensures that these customers are protected.

Why gas tariff increases?

- Significant increases in Alinta's operating costs, particularly wholesale gas commodity charges, transmission and distribution network charges, and retail operating costs (including labour costs) have had a substantial impact on the cost of delivering gas to consumers.

- Regulated tariff caps need to be at cost reflective levels in order to ensure there is ongoing investment in the Western Australian energy industry, resulting in the delivery of a more secure and reliable supply of gas and more choice for end use customers.

A safety net for customers experiencing financial difficulty

- Alinta is committed to assisting customers experiencing genuine financial hardship.

- Customers can call Alinta on 13 13 58 to discuss a payment arrangement or payment extension. Alinta provided assistance to over 68,000 customers in relation to payment extensions in 2008-09.

- Alinta also offers flexible credit management and payment processes, direct debit and monthly bill smoothing. More than 115,000 customers currently benefit from direct debit and bill smoothing options.

- In addition, Alinta provides funding support to emergency relief agencies, financial counsellors and welfare support agencies in Western Australia via the AlintaCARE programme. AlintaCARE has been running since 2003 and Alinta reviews its contribution year on year.

How will the increase affect customer accounts?

A typical household currently pays around $390 each year for their gas. The new tariff will mean an increase of $1.70 per week for them.

 

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