New South Wales gas and electricity customers will see a electricity price increase of 3 per cent and an average gas price increase of 8.6 per cent under the proposed pricing structure released by the NSW Independent Pricing and Regulatory Tribunal (IPART).

The draft decisions would govern the pricing structure from July 2013 to July 2016, according to IPART Chairman Peter Boxall.

Dr Boxall said that the proposed pricing structure is inline with broader inflation costs, and were being kept down thanks to lower network prices, while the 8.6 per cent gas price increase reflects increased network and retail costs.

“The electricity price pressures caused by rising network costs and the introduction of carbon pricing are moderating,” Dr Boxall said.

“While we haven’t set prices beyond 2013, at this stage we expect electricity prices to fall behind inflation in 2014 and reduce in real terms by 2015.

“The situation for future gas prices is less clear. There are continued increases in network costs. However with significant uncertainty about future wholesale prices, we are recommending a periodic review before setting the price changes for 1 July 2014 and 2015.”

Dr Boxall said that IPART expects a future contraction in prices, with projections forecasting that prices will fall by as much as 5 per cent from 2015 onwads.

“These more modest price changes follow several years of large price increases driven by increases in the costs of electricity supply caused by rising network costs and the introduction of the carbon pricing mechanism,” Dr Boxall said.

IPART found that the main reasons behind the gas price increases were a combination of network costs and a levy imposed on retailers for the use of the State’s distribution network.

“The sustained increases in network costs have been the largest contributor to recent increases in gas prices. We consider that action is required to address policy settings that are leading to higher than necessary gas network prices,” Dr Boxall said.

The energy report can be found here

The gas report can be found here