GasNet feeling the heat Business The Australian

GAS transmission provider GasNet Australia Group may ask the regulator to change the way its payments are structured to offset the effect warmer winters are having on its revenue.
GasNet owns and maintains all of Victoria's 1930km of gas transmission pipeline and is currently paid on the basis of how much gas flows through those pipes, at a tariff rate set by the Australian Competition and Consumer Commission.
Last year the company's revenue was hurt by a warm winter in Victoria, which led to lower than usual gas flows.
Managing director Christine O'Reilly says four out of the past five winters in Victoria have been among the warmest on record and the company will be expecting some recognition of this at its next regulatory reset at the end of 2007.
GasNet's tariffs in Victoria are set by taking its target revenue and dividing it by a forecast of gas volumes.
"The idea is that if more gas flows, and there are incentives to flow more gas, we get the benefit of the upside -- the problem is that there has been no upside," Ms O'Reilly said.
"Come 2007 our job will be to make sure that the volume forecast that goes in at that time is far more appropriate and takes regard of what has obviously been a warming trend."
The company may simply push for higher tariffs in 2007, but a rethink about how it is paid for maintaining the Victorian network is also on the cards.
Electricity distributors are paid a fixed rate no matter how much power flows down the line and Ms O'Reilly said this type of revenue cap could make sense for GasNet as well.
"At our regulatory reset we've obviously got to have a look at whether we want a tariff cap or a revenue cap," she said.
GasNet chairman Rod Keller told shareholders at the annual meeting in Melbourne yesterday that the company was not ruling out taking part in the consolidation in the energy and infrastructure sector.
"Industry consolidation is continuing, and given the quality of the group's assets ... it is possible the group might participate in some way," Mr Keller said.
But he said GasNet had not had any "meaningful discussions" at this stage.