$123 million gas price hike shut down by regulators

A PROPOSAL for massive rises in Victorian gas prices over five years has been stopped dead.

The proposal from APA GasNet, which provides transmission pipelines in Victoria, would have added $123 million to costs paid by customers.

But the Australian Competition Tribunal on Friday backed an April decision by the Australian Energy Regulator to reject the price rises.

The gas company sought a review of the regulator's decision through the tribunal, on the basis the AER's pricing decision was too low for it to efficiently operate.

A final tribunal decision backed the regulators stance that the company's calculation of $87 million in depreciating assets and a $36 million rate of return could not be upheld.

AER chairman Andrew Reeves said the decision was a win for Victorian gas consumers, confirming gas prices should fall, not rise, over the next five years.

Mr Reeves also said it highlighted problems with the current National Gas Rules, and the AER would propose a rule change to find a solution.