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Jemena’s $2.5 billion fracking gouge challenged by lawyers and analysts

MEDIA RELEASE

26 July 2018

Environmental Justice Australia, on behalf of the Institute for Energy Economics and Financial Analysis (IEEFA), has requested that the Australian Energy Market Commission (AEMC) remove an exemption that allows Jemena’s Northern Gas Pipeline to not comply with National Gas Rules.

The exemption means consumers could be out of pocket more than $2.5 billion over 15 years when buying fracked Northern Territory gas funnelled through Jemena’s pipeline.

The exemption, or derogation, removes oversight of tariffs by the Australian Energy Regulator for the 622km Northern Gas Pipeline between Tennant Creek (NT) and Mt Isa (Qld).

Jemena can also ignore disclosure rules designed to avoid an unregulated monopoly.

Jemena’s Australian parent company boldly stated in its latest financial report that ‘management successfully worked with the Northern Territory Government to secure a derogation’.

EJA raised questions about inappropriate influence on government officials in its May 2018 report Fracking the Northern Territory.

“The NT government, in effect, sponsored the derogation, at the behest of the company,” said EJA Principal lawyer David Barnden.

“Jemena successfully lobbied for a 15-year exemption to the rules. On Jemena’s lowest proposed tariffs, consumers could be gouged between $350 million and $630 million dollars over 15 years. Those are conservative numbers for the 12-inch diameter pipeline currently under construction.

“There is nothing to stop Jemena from raising prices further at any time.”

Since the moratorium on fracking in the Northern Territory was lifted, Jemena has been pursuing a second, parallel pipeline to carry fracked gas.

“If the gas rules are not changed, consumers could be left more than $2.5 billion out of pocket for gas produced by destructive hydraulic fracturing,” Mr Barnden said.

“There is a strong case for AEMC to remove Jemena’s unfair exemption.”

Bruce Robertson, gas analyst at IEEFA, said, “Jemena sets its own tariffs to transport gas and those tariffs are the most expensive in Australia for an overland pipeline.

“Unless this unfair exemption is removed there will be no oversight of Jemena’s pricing decisions and any price rises will undoubtedly be passed on to gas consumers,” he said.

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