Submission to AusNet Services’ 2023-28 Access Arrangement variation proposal

29 November 2024

To:       Mr Arek Gulbenkoglu
            General Manager
            Australian Energy Regulator
            GPO Box 1313
            Canberra ACT 2601

Re:      AusNet Services – Access Arrangement 2023-28 – Variation proposal

Dear Mr Gulbenkoglu,

Thank you for the opportunity to provide a submission to AusNet Services’ 2023-28 Access Arrangement variation proposal.

IEEFA is an independent energy finance think tank that examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

AusNet Services has proposed to vary its 2023-28 access arrangement, on the basis of material policy developments around gas usage in Victoria. Significantly, AusNet has requested an additional $70 million in accelerated depreciation, on top of the $105 million approved by the Australian Energy Regulator (AER) in its original decision.

In response to this proposal, the AER must consider whether AusNet Services’ reasoning for varying its 2023-28 Access Arrangement is valid, and whether increasing accelerated depreciation is an appropriate response to the issues it has raised.

In IEEFA’s view, while there is uncertainty surrounding the likely pace of gas demand reduction, its future direction is increasingly clear, and recent policy developments in Victoria are not unexpected. Accelerated depreciation is not the right regulatory tool to manage stranded asset risks in a scenario where gas demand is set to decline. We also argue that the AER must consider the broader context of this proposal – and how its response may set a precedent for other gas networks impacted by the issues raised by AusNet.

Please do not hesitate to contact us if you would like to discuss any of the matters in our proposal further.

Kind regards,

Jay Gordon, Energy Finance Analyst, Australian Electricity

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