WESTERN Sydney suburbs including Parramatta, Smithfield and Campbelltown will be cut off from gas supplies for an unprecedented 21 days during the height of winter in 2016, energy giant AGL has warned.
In the company’s first ever study into the future of the gas industry, Australia’s second largest energy company has warned that the state faces a “gas supply cliff” within the next 12 months.
This would have a major impact not only on residences but also businesses that require gas to operate.
NSW has never before experienced a major energy shortfall, with AGL predicting unless new means of finding resources are unearthed, many “large-consuming gas suburbs” including Parramatta and Campbelltown will face 21 days without energy at the height of winter.
This figure would balloon to 45 days in 2017.
NSW is the only state not self-sufficient in gas, with about five per cent of the state’s needs produced at Camden.
Under conditions of a supply crisis, state governments have emergency powers and are capable of redirecting contracted gas to stabilise the energy market.
However such a move would involve the redirection of gas supplies from neighbouring states.
South Australian resources minister Tim Koutsantonis warned late last year that he would not bail out NSW to avoid a crisis.
“I would not allow any commercial arrangement in South Australia to be broken to supply gas to Sydney. I would say fix your own regulatory problem,” Mr Koutsantonis said.
Professor Paul Simshauser, Chief Economist at Griffith University and Tim Nelson, Head of Economic Policy at the University of New England said that usually such a cliff-edge in NSW would be solved through a series of negotiations between gas producers. But with virtually no existing gas supplies in reserve by that point, policy makers urgently needed to find a solution.
The AGL report states: “While some small additional gas supplies can be brought on stream, it can’t happen within the timeframe required for NSW to avoid high-risk shortages which will severely impact gas-intensive manufacturing customers, who will be forced to cease trading.”
Mr Simhauser said that “if nothing is done, we could get 100 days a year where people sit on their hands.
“It’s the first time I’ve seen detailed modelling like this throw up such a scenario.
“What makes this worse is that if we continue on the current course, you just don’t know when the gas shortages will come.”
There are 1.3 million residential and business connections to the reticulated gas network in NSW. The report has warned that 500 large businesses, employing 185,000 people could be affected by any gas shutdowns in Sydney’s west.
The large, gas consuming areas that will be impacted most by the gas shortages include Parramatta, Smithfield and Campbelltown in Western Sydney, as well as Bathurst, Lane Cove, East Hills, Heffron, Maroubra, Port Stephens, Murrumbidgee and Wollongong.
Late last month the state’s leading gas retailers — including AGL — applied to the pricing regulator, the Independent Pricing and Regulatory Tribunal, to raise prices by as much as 20 per cent from July.
The increases only apply to those 200,000 customers on regulated tariffs and not the marked offers put forward by retailers.
AGL has said it wants a 20.3 per cent rise from July, while also signalling prices would rise by a further 5.5 per cent in mid 2015.
Business chamber of Australia CEO, Jennifer Westacott said such news only highlighted the need for states to harness the potential of natural gas.
“State and federal government’s need to stop reacting to the misinformation and start showing political leadership and support the natural gas industry,” Ms Westacott said
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