Natural gas users face higher bills after hikes by pipeline operators approved

The government is currently working on a gas transition plan to move away from fossil fuels as part of decarbonising the economy. Photo / Getty

By RNZ

Natural gas consumers face higher bills after the Commerce Commission approved an increase in charges by gas pipeline operators.

The average household bill will rise by 3.8 per cent a year, about $48, in each of the next four years, starting from October.

The rises follow a commission review of the prices the operators can charge to maintain the distribution network as the Government moves to phase out gas use as part of its emissions reduction policies.

"Our decision balances price rises for gas users with the need for gas pipeline businesses to continue to invest appropriately to maintain safe and reliable supply while there is still demand for natural gas," associate commissioner Vhari McWha said.

"Natural gas remains an important transitional fuel and essential for many homes and businesses, so investment will be required to ensure the network continues to provide safe and reliable supply of natural gas over this horizon."

The allowed price increases are lower than those contained in an earlier preliminary decision.

"The final default price-path we have announced today reflects that the remaining life of the natural gas pipelines in New Zealand is likely to be shorter than previously expected," McWha said.

The four gas pipeline businesses subject to the commission's decision are GasNet, PowerCo, Vector and First Gas, which owns distribution and transmission pipes.

There are about 300,000 gas users, mostly domestic, but with some industrial and commercial users.

McWha said it was possible that some operators would not recover their costs even with the price increases.

The Government is working on a gas transition plan to move away from fossil fuels as part of decarbonising the economy.

First Gas has already started work on mixing green hydrogen with natural gas a step towards a change to hydrogen use only by 2050.