MGUG welcomes Draft Decision on Gas Pipeline Services

Press Release
From: Major Gas Users Group
Date: 30 October 2012
MGUG welcomes the revised Draft Decision on the Initial Default Price-Quality Paths for Gas Pipeline Services

The Major Gas Users Group (MGUG) has welcomed the Commerce Commission’s revised draft decision on the Initial Default Price-Quality Paths for Gas Pipeline Businesses which proposes significant reductions in the prices to be charged by Vector for delivering natural gas.

Following a meeting on Thursday last week, the Group whose members include Fonterra Co-operative Group Ltd, Carter Holt Harvey Ltd, Refining NZ, New Zealand Steel Ltd, Ballance Agri-Nutrients Ltd, and the New Zealand Sugar Company Ltd noted the Commission’s decision has reinforced the Group’s concern about the high cost for delivering natural gas.

“Gas transmission and distribution costs are high and have continued to escalate each year without any observable improvements in service to justify the costs and increases” said Richard Hale, representing the MGUG. “ The industries we represent in the Group operate in a global context and they need to ensure that all their costs, including the cost of energy services, are at a level that enables them to remain competitive and continue to contribute to the New Zealand economy. “

Hale said the Group will be examining the Commission’s decision closely over the next few weeks.
“We would like to see the Commission go further and attempt to gain claw back on some of the over charging that appears to have occurred as well as implement the price reductions.” The Commission’s decision comes at a time when the industry through the Gas Industry Company is examining capacity issues on Vector’s northern pipeline, including access arrangements, to ensure that Vector’s pipeline was being fully and efficiently utilised.

Hale said he hoped Vector would focus its efforts and resources on engaging constructively with the Gas Industry Company’s work programme for improving access arrangements to ensure efficient capacity utilisation of the gas transmission system.

“This would add real value for both Vector and consumers rather than Vector engaging in costly and protracted legal and regulatory challenges to the Commission’s work, which would only impose further unnecessary costs and delays on consumers.”
ENDS
About the Major Gas Users Group

Members of the Major Gas Users Group make up a significant proportion of New Zealand’s productive sector and as major exporters (or in import substitution) use large quantities of natural gas for energy (including co-generation), process heat and as a feedstock.

Membership consists of:

Fonterra Co-operative Group Ltd
Carter Holt Harvey Ltd
New Zealand Steel Ltd
Refining NZ
Ballance Agri-Nutrients Ltd
New Zealand Sugar Ltd

Collectively the group consumes about 25 Petajoules per annum of natural gas or about 16% of the gas supplied to the market in New Zealand. Our members are driven by the commercial drivers operating in international markets - their efficiency and profitability is directly influenced by international competition. Reliable and competitive energy supply (including the cost of delivering gas) is a critical component in ensuring these businesses remain competitive in a global context.

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