A $1.1bn win for gas customers

VICTORIAN gas giants have had a $1.1 billion cash grab rejected as consumers battle with the cost of living.

The Australian Energy Regulator released a final decision on gas network tariffs that typically make up 40 per cent of household bills.

"For consumers, this should mean a reduction or small increases in the network component of their gas bills, ending a previous trend of substantial increases," AER chairman Andrew Reeves explained.

Hundreds of thousands of householders in the Envestra zone, including Melbourne's north, outer east and south, and some country areas still face a total $80 rise in distribution charges over the next five years, or $16 a year.

But tariffs for those in the Multinet region in the city's south and east, the Yarra Ranges and South Gippsland should be frozen.

And SP AusNet area charges across central and western Victoria are expected to fall $25 for the time period.

The ruling, effective from July 1, also means transmission costs could drop $25 if retailers pass on the changes.

St Vincent de Paul Society spokesman Gavin Dufty said the decision followed complaints of businesses gouging customers by inflating expenditure forecasts, or underspending on promised pipe upgrades.

"It's good to see the regulator muscling up, and retailers are on notice to pass on any savings. However, in reality, your total gas bill is likely to keep going up because of rising wholesale costs," Mr Dufty said.

Monopolies APA GasNet, Envestra, SP AusNet and Multinet, which run the pipe network, originally wanted to recoup $4.3 billion to maintain and expand the system.

The regulator ruled this was unjustified given lower funding costs, instead allowing $3.2 billion.

Distributors reaped $120 million more in returns on assets than forecast for 2009-2011, mainly due to underspending on replacement pipes.

"This underspend meant that consumers ... paid for pipeline replacement that was never delivered."

Multinet had replaced less than half the kilometres of pipes forecast, the regulator revealed.

karen.collier@news.com.au

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