Submission: Jemena Gas Networks (NSW) – Access arrangement 2025-30

30 August 2024

To: Australian Energy Regulator (AER)
Re: Jemena Gas Networks (NSW) – Access arrangement 2025-30

Thanks for the opportunity for the Institute for Energy Economics and Financial Analysis (IEEFA) to present its submission to the AER’s consultation on the proposal for Jemena Gas Networks (NSW) – Access arrangement 2025-30.

IEEFA is an 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.

Regarding Jemena’s proposal overall, IEEFA offers the following comments:

• The context of domestic gas consumption in Australia, and in New South Wales (NSW), is rapidly changing.
• The AER’s decision on Jemena’s gas network access arrangement ought to support a managed decline in demand across Jemena’s network, while removing incentives for the network to grow.
• Key developments underway in NSW will affect the outlook for Jemena’s demand:
  • The inclusion of heat pump hot water systems in NSW’s Energy Savings Scheme, which has been followed by rapid large-scale uptake (2.5% of dwellings in NSW installed a heat pump hot water system in 2023 alone).
  • Revisions to NSW’s BASIX building code that encourage all-electric dwellings as a low-emissions solution.
  • The NSW government’s commitment to develop a ‘Gas Roadmap’ to provide clarity on gas decarbonisation and support household and business electrification.
• IEEFA has previously recommended the NSW government develop a plan to manage the phase-down of its gas distribution network, and engage with the AER to ensure Jemena’s 2025-30 access arrangement is aligned to this plan.
• Similarly, IEEFA strongly recommends the AER engage with the NSW government when making its decision on Jemena’s 2025-30 access arrangement.

Our comments on specific aspects of Jemena’s proposal are listed in the pages that follow.

Regards

Jay Gordon – Energy Finance Analyst, Australian Electricity

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