Gas Industry Co’s Work Programme is funded through a combination of a levy and ‘market fees’. The levy is set after consultation with stakeholders on the proposed work programme and the market fees cover the costs of service providers that are required to be engaged under rules and regulations.
The levy is approved each year by the Government and recovered through regulation from industry participants including gas retailers. As with their other costs, retailers factor the levies and market fees into their operating costs and either pass them through explicity or simply absorb them into their tariffs. Either way, the costs are generally passed on to consumers by the gas retailers.
Over recent years, the total levy has gone down, which reflects our own cost-saving focus as well as downward pressure from the industry and Government. The market fees have remained reasonably stable over the same period.
The levy has two components – a Wholesale Levy, charged on each gigajoule (a gigajoule is equivalent to 278 KWh of gas sold by a gas producer) and a Retail Levy charged on each active customer connection (ICP). The proportion of Wholesale Levy vs Retail Levy to make up our total levy funding requirement reflects the weighting of our Work Programme, which changes from year to year.
In general, the Gas Industry Co Levy represents less than 1% of the average annual domestic consumer’s gas bill. Over the years of Gas Industry Co’s existence, the levy would account for $6-$9 per annum of a domestic customer’s gas bill.
Full information on our levy process, together with the latest Levy Regulations and related documents, can be found here.
Original Link: http://gasindustry.co.nz/consumers/gas-industry-co-levy-explained/
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