NSW gas demand to fall and cause price shock

Domestic gas prices are predicted to rise sharply as a result of the increased export of LNG from Australian projects.

A new report from the Melbourne Energy Institute entitled ‘The Dash From Gas’ predicts a massive “price shock” of exorbitant gas prices in NSW as domestic markets are opened to international markets for the first time.

The report also predicts that, contrary to predictions made by gas companies, demand for gas will decline as consumers move towards more economical energy sources for heating and cooling, chiefly electricity but also rooftop solar, which is now a burgeoning market.

Melbourne Energy Institute energy advisor Tim Forcey and director Mike Sandiford authored the report, and forecast that expanding gas networks and development of new coal seam gas fields in NSW will increase the costs of production, and in turn increase the cost to the consumer.

With demand set to decrease, the overestimation of demand by gas companies would result in unnecessary and poor investment in production expansion, which would drive up the cost of gas.

Increased costs combined with a lessening demand would provide an environment for price shock.

Factors said to decrease demand for gas include ongoing energy efficiency schemes, technological improvements in gas and electrical devices, progressing renewable energy development and production (including self-generation of power with rooftop photovoltaics), warmer winter temperatures, reduced manufacturing industry, and fuel-switching to coal-fired electricity and renewables.

Choice Magazine reported last year that the average gas consumer in NSW would be expected to pay between $135 and $226 more each year on their gas bill through to June 2016, thanks to a draft decision from the Independent Pricing and Regulatory Tribunal (IPART) allowing for an average 17.6% increase in regulated retail gas.

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