Auckland’s electricity and gas network company, Vector, has issued a stark warning regarding potential gas supply shortages in certain suburbs. In a worst-case scenario, the company may be forced to halt gas supply entirely to some areas.
Vector chief executive Simon Mackenzie is urging the government to develop a comprehensive plan to ensure households remain connected to gas supplies as usage declines and maintaining old pipelines becomes economically unfeasible.
While the previous Labour government was working on a gradual exit from fossil gas by 2050, the current coalition government has not set a goal to phase out gas and is reopening oil and gas exploration. Despite this, the supply of gas is rapidly diminishing.
Mackenzie expressed concerns that there is no reliable replacement for gas on the horizon, including liquefied natural gas (LNG), which could come with unpredictable pricing if they materialise.
Vector warned that remaining gas users might encounter “exponential” price increases or be compelled to disconnect from gas sooner than anticipated, leading to costs ranging from $7,000 to $20,000 per household for new appliances and fittings.
It also said that if gas customers rapidly transition to electric appliances, gas pipeline companies would be unable to recoup the costs of their investments.
Vector pushes the government to implement regulatory measures or alternative strategies to help recover its pipeline investments and maintain gas services, even in the event of a significant decline in users.
This request aligns with similar discussions occurring in Australia, where gas pipeline operators in Victoria and Western Australia have advocated for regulators to allow them to increase network tariffs for customers now, enabling quicker recovery of their investments in gas infrastructure.
Accelerated cost recovery is viewed as a safeguard, allowing companies to recoup expenses while the customer base remains robust, in anticipation of a potentially smaller group of users left to cover maintenance costs in the future.
Energy Minister Simeon Brown stated that he is seeking advice from officials regarding an energy strategy.
“We are also working to facilitate the import of liquefied natural gas (LNG) to enhance our energy security in the interim,” a statement from the minister’s office indicated.
Brown highlighted that the government’s primary energy objective is to improve electricity prices by fostering competition in the electricity market and fast-tracking renewable electricity projects.
According to Brown, the government’s list of fast-tracked initiatives includes 22 renewable electricity projects.