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AER Final Decision supports blending renewable gas into the South Australian gas supply

The Australian Energy Regulator (AER) has today released its Final Decision for Australian Gas Networks’ (AGN) Access Agreement for the South Australian gas distribution network for the five year period commencing on 1 July 2021.

AGN is part of the Australian Gas Infrastructure Group (AGIG) and delivers natural gas to more than 460,000 homes and businesses across South Australia.

The AER Final Decision delivers an upfront price cut of 6% (after inflation) on the distribution component of a customer’s bill. For the average South Australian residential customer, this means a reduction of around $35 for the year commencing 1 July 2021, while small businesses will see a reduction of around $348 per annum.

Thereafter, gas bills are expected to increase by an average of $14 (or 1.6 per cent) per year over the remaining four years of the 2021–2026 period for residential consumers and small businesses. In 2026, gas distribution charges will be lower in real terms than they were in 2016.

Gas network charges make up about a half of the average residential gas bill in South Australia.

Importantly, the AER has approved two key strategic initiatives that had strong support from our customers as part of our customer and stakeholder engagement process.

The first initiative relates to blending renewable gas into our network as part of meeting our unaccounted for gas obligation, which decision provides important support as we start the process of decarbonising gas supply in Australia.

This decision is consistent with our business objective that targets 10% renewable, or carbon-free gas in our networks by no later than 2030 and delivering 100% renewable gas developments from 2025. Full decarbonisation of our networks is targeted by no later than 2050, and by 2040 as our stretch target.

The AER has also supported our Vulnerable Customer Assistance Program (VCAP), which will provide our customers in vulnerable situations with tailored services as well as providing additional financial and customer service support.

AGN will invest approximately $513 million across the South Australian network over the next five years – including replacing all cast iron mains by 2026. This represents an important safety milestone for our customers and for our business. Our mains replacement program has the additional benefit of ensuring that the South Australian gas distribution network is capable of delivering a 100% carbon-free hydrogen gas supply into the future.

The AER Final Decision supports the continued strong growth in gas connections in South Australia, with over 40,000 new connections to the gas network planned over the next five year period.

In announcing its decision, the AER stated: “We consider that AGN is performing well and continues to deliver a high level of safety and reliability for its South Australian gas network. Our final decision recognises AGN’s continued role in connecting customers to its network, investing in mains replacement and seeking to innovate with customer engagement and support.”

AGIG’s CEO, Mr Ben Wilson, noted the decision was broadly in line with AGN’s revised proposal submitted to the AER.

“The new investment in our plan will include the removal of all of AGN’s old cast iron mains, which is a significant safety milestone for our customers and for the business, the wider use of digital channels to improve customer communications and investing in a vulnerable customer assistance program, including by prioritising services to this group of customers.” Mr Wilson said.

“I am particularly pleased with the AER support for starting the process of blending renewable gas into the South Australian gas supply. This is a key step in reaching our target of providing a 10% carbon-free gas supply by 2030 and full decarbonisation of gas supply by no later than 2050. We are also targeting providing our customers with 100% carbon-free gas supply solutions by 2025.”

“We will continue to maintain a high level of community safety and reliability, sustaining our strong record of customer service and keeping our costs low whilst investing for the future,” Mr Wilson said.

About AGN

AGN owns gas distribution networks across Australia, including networks in South Australia, Victoria and Queensland as well as Wagga Wagga and Albury in regional NSW. AGN delivers gas to around 1.3 million homes and businesses.

 

About AGIG

Australian Gas Infrastructure Group (AGIG) owns and operates one of Australia’s largest gas infrastructure businesses with operations across every mainland state and the Northern Territory supplying approximately 2 million customers. Operations include 40,000km of distribution and transmission gas pipelines, 60 petajoules of gas storage capacity, gas processing facilities and remote power generation.

AGIG’s vision is to be the leading gas infrastructure business in Australia - by delivering for customers, being a good employer, and being sustainably cost efficient.

In 2017, Australian Gas Networks (AGN), Dampier to Bunbury Pipeline (DBP) and Multinet Gas Networks (MGN) came together to form AGIG. The combined distribution, transmission and storage assets make AGIG one of the largest gas infrastructure businesses in Australia.

 

For further information contact

Craig de Laine, Executive General Manager, Customer and Strategy, T (08) 8418 1129 M (0403) 309 940