The Australian Energy Regulator (AER) has released a stakeholder information paper on gas pipelines and prices amid an uncertain gas market in an effort to shed light on the effects of the energy transition on pipeline regulations.
The research aims to assist stakeholders in understanding the implications for economic regulations, networks and, in turn, consumers.
The AER hopes the paper will be useful for the upcoming Victorian gas transmission and distribution access arrangement reviews.
AER chair Clare Savage said the paper would be a catalyst for engagement with industry and other stakeholders to understand how regulation can keep up with the pace of change.
“It’s a timely information paper as the decarbonisation of Australia’s energy market ramps up,” said Savage.
“Stranded asset risk is looming as the biggest threat to the gas industry. Gas network businesses invest in assets with fixed costs that last into the next century.
“Maintaining those assets with a potentially smaller consumer base requires new thinking on efficient network investment and how to manage the price impact on consumers and intergenerational equity.”
One of the variables for the efficacy of gas infrastructure into the future will be the viability of renewable hydrogen as a cost-effective alternative to natural gas.
This will have implications for the future use and regulations of gas infrastructure
The paper also explores factors that are likely to negatively impact local demand for natural gas in the long term, including government decarbonisation policies and growing investment in renewable energy.
“I commend this information paper as a starting point of a wider ongoing discussion on how we may navigate through the uncertainties and the transformation of the industry to a low carbon future,” Savage said.
The Victorian gas transmission and distribution access arrangement reviews will take place in December 2021 and July 2022.
For more information visit the AER website.