Natural Gas Surcharge for South Gippsland

Multinet has formally received approval to apply a tariff that includes a premium to the current  Multinet Gas tariffs, for natural gas to the towns in the South Gippsland covering the regional towns of:

The Essential Services Commission (ESC) has approved the tariff which includes a premium of $3.30 per GJ (indexed by CPI) above the 2005 Reference Tariffs approved under the current Multinet Network Tariffs. This is in accordance with section 8.25 of the National Third Party Access Code for Natural Gas Pipeline Systems.
Note that this charge for the 2007 calendar year is $3.5338 excl GST (and indexed by CPI each year). This premium component of the tariff will be invoiced directly to the customer's gas retailer whom will invoice the end use customer as part of their gas retail rates.

Gas Tariffs

There is no standard gas tariff in Victoria as gas tariffs vary across Victoria and may vary from one town to the next.

A gas tariff has a number of different components, levied by different companies that make up the final invoice that the end use customer receives from their gas retailer including:

A number of these tariff components can vary, which is dependent on factors such as the location, gas company and the economics of a particular project.

The final tariff to be paid in the South Gippsland Region is within the current range of tariffs charged in Victoria and is similar to tariffs applied to other recent natural gas network extensions in regional Victoria.

Under industry regulation, natural gas projects can only proceed if they are economic. Natural Gas Extension Programs can have an economic shortfall. This is generally due to the relative size of the construction costs of a distribution network compared to the amount of revenue that can be earned. The economic shortfall in the South Gippsland Project is funded by a combination of a State Government Grant and the increased tariff.

Who is this Tariff applied to?

This Tariff is applicable to all new natural gas connections in the above five towns. Based on an average domestic house using approximately 50 GJ per annum (using natural gas - space heater, hot water service and cooktop) this equates to approximately $180 per year additional charge (approx $3.50 per week) to the Metropolitan area.

Why is the Tariff applicable?

In order for this project to be economically viable to reticulate natural gas to the five towns, it was necessary to apply a locational tariff that includes a premium within the five towns in addition to Multinet's residential and non- residential tariff approved under the current Access Arrangement. This tariff was submitted as part of Multinet's submission for the project in 2005 to the Victoria State Government.

How long is it applicable for?

This tariff has been approved until 31 December 2007. At that time it will be reviewed as part of an industry review of all distribution tariffs in Victoria. Multinet has applied for the tariff to apply over a 20-year period and be subject to annual approval each year as part Multinet's submissions to the ESC for gas distribution tariffs.

Further information on the approval from the ESC can be found at the following website at www.esc.vic.gov.au