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22 June 2004 - A one-off $A54.6m ($37.6 m) payment to gas distributer Envestra Ltd by the South Australian government would eradicate the need for a retail price increase, the utility said today.
Envestra said it had executed an agreement with the government to recover $A54.6m ($37.59m) in costs associated with the introduction of retail contestability in the state's natural gas market.
Envestra has spent two years developing systems that will enable gas consumers to move between retailers of their choice.
Until late March the company had expected to recover the $A30m ($20.66m) capital expenditure incurred on the project and annual operating costs of about $A6m
($4.13m) through a special tariff levied against retailers.
The capital expenditure was to be recovered over the next five years, as the equipment was being depreciated.
However, on March 27, the SA government announced that it would reimburse Envestra for the capital expenditure and operating costs for the next five years, through a one-off
advance payment.
Envestra's managing director Ian Little said that under the agreement, the government would pay Envestra $A54.6m ($37.6m) on June 30, 2004.
"Without this payment, Envestra would have increased the prices charged to retailers for distributing natural gas by approximately $A26 ($17.90) per domestic consumer per annum,"
Mr Little said.
"The payment by the government will remove the need for this charge for the next five years."
Payment may be recorded as revenue in the current year and have a significant impact on the financial results for the 12 months ending June 30, 2004, he said.
There would also be an offsetting negative impact on the results for the next five years.
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