Over the past two years Envestra has been developing systems that have enabled gas consumers to move between retailers of their choice. Until late March the company had expected to recover the $30 million capital expenditure incurred on the project and annual operating costs of about $6 million through a special tariff levied against retailers.

The capital expenditure was to be recovered over the next five years, as the equipment was being depreciated. On 27 March, the SA Government announced that it would reimburse Envestra for the capital expenditure and operating costs for the next five years, through a one-off advance payment.

Envestra’s managing director Ian Little said, “Under the agreement, the Government will pay Envestra $54.6 million on 30 June 2004. Without this payment, Envestra would have increased the prices charged to retailers for distributing natural gas by approximately $26 per domestic consumer per annum. The payment by the Government will remove the need for this charge for the next 5 years.”