Regulated Gas Network Supernormal Profit Extraction - Consumer Overcharge
Definition
IEEFA analysis of 2014-2022 data: regulated gas networks made AUD 1.8 billion in supernormal profits on top of their AUD 2 billion profit allowance. Actual profits were nearly double allowed profits (90% higher). Primary driver: 'revenue over-recovery'—networks consistently recovered more revenue than forecast in every year since 2011. South Australia's gas network paid shareholders 30% returns in a single year. Impact: 5% added to typical consumer gas bills. Root cause: AER's demand-forecasting methodology has a systematic under-forecasting bias that networks exploit.
Key Findings
- Financial Impact: AUD 1.8 billion over 8 years (AUD 225 million annually); approximately 5% of typical gas consumer bills; South Australian network returned 30% to shareholders (excess of typical 8-10% allowed return)
- Frequency: Annual - recurring every year since 2011 according to AER data
- Root Cause: Regulatory methodology flaw: AER demand-forecasting methodology under-forecasts consumer demand, allowing networks to over-recover revenue. Networks exploit this bias. No systematic audit to correct for bias or refund excess.
Why This Matters
The Pitch: Australians were overcharged AUD 1.8 billion across gas networks over 8 years (AUD 225 million annually) due to revenue over-recovery and supernormal shareholder returns (up to 30% in one year in South Australia). Forensic review of AER-approved vs. actual revenue recovery would identify systemic forecasting manipulation and unbilled/unrecovered consumer refunds.
Affected Stakeholders
Australian Energy Regulator (AER) Forecasting Teams, Gas Network Finance & Revenue Management, Consumer Advocate Bodies, Retail Gas Billing Teams
Deep Analysis (Premium)
Financial Impact
Financial data and detailed analysis available with full access. Unlock to see exact figures, evidence sources, and actionable insights.
Current Workarounds
Financial data and detailed analysis available with full access. Unlock to see exact figures, evidence sources, and actionable insights.
Get Solutions for This Problem
Full report with actionable solutions
- Solutions for this specific pain
- Solutions for all 15 industry pains
- Where to find first clients
- Pricing & launch costs
Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Unaccrued Royalty Revenue on Exported LNG - Zero Royalty Contracts
Western Australian State Royalty Revenue Decline - Unrecovered Collections
Environmental Protection Licence Non-Compliance Fines
NOPSEMA Environment Plan Approval Delays
EIS and Site-Specific EA Application Costs
STTM Deviation Settlement Imbalances
Request Deep Analysis
🇦🇺 Be first to access this market's intelligence