New distributor benchmarks for unaccounted for gas

The Essential Services Commission has set new benchmarks for unaccounted for gas levels, to assist energy retailers and distributors reconcile differences in the amount of gas purchased and used on the network.

Unaccounted for gas is the difference between the amount of gas entering the distribution system and the amount ultimately delivered to customers, with differences caused by a range of factors including metering errors, leakages, and data quality issues such as measurement conversion errors.

In past years, distributors’ unaccounted for gas performance has ranged between 4 and 6 per cent.

The current benchmarks were due to expire at the end of the year however, the commission has extended them by six-months to 30 June 2023. The extension aligns the benchmarks with the timings of the Australian Energy Regulator’s approvals of gas distributors’ revenues in Victoria, which has changed from calendar years to financial years.

The new benchmarks for distributors will then apply from 1 July 2023 to 30 June 2028 and range from 4.06 to 5.49 per cent, with more than half remaining at current levels.

Of the three benchmarks that have changed, two have increased by 0.06 per cent and the third has increased by 0.19 per cent.

In Victoria, unaccounted for gas benchmarks are set out in the Gas Distribution System Code of Practice to assist financial arrangements between distributors and retailers. When entering contracts, retailers have to buy enough gas to cover their customers’ consumption and any unaccounted for gas, using the benchmark to gauge that amount.

Gas retailers and distributors then reconcile their financial obligations to each other annually, based on whether the actual amount of unaccounted for gas was over or under the benchmark.

Next year, the commission will begin reviewing the Gas Distribution System Code of Practice which sets out the minimum standards for the operation and use of the Victorian system.