Gas prices are set to soar, according to a new report. Source: The Daily Telegraph

An independent report to the state government has warned that, unless controversial coal seam gas deposits in Camden, Gunnedah and the Clarence-Moreton basins were developed, there would not be enough supply to meet demand by the end of 2014.

Suppliers would be forced to source gas supply from interstate, which would significantly drive up the prices from the start of 2015.

The report prepared by independent research firm, Wood Mackenzie, found that NSW was “highly exposed” to gas shortages. “Without more CSG supply, it will need to secure gas from other states, and this is far from guaranteed,” the report states.

It said opposition to CSG operations was strongest in NSW and was becoming increasingly politicised, with the Greens and opposition groups calling for a ban.

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CSG mining involves tapping underground coal seams, which often occur close to properties, national parks and next to water supply.

Energy Minister Chris Hartcher said the state’s 1 million gas consumers could see bills triple if more reserves of the gas were not exploited.

“A responsible government must take the necessary action to maintain and increase our state’s energy security, which includes the responsible development of a domestic gas industry,” he said.

Mr Hartcher said Green groups had refused to join a rational debate on the state’s future energy needs.

The average gas bill in NSW is already about $716 a year and experts believe gas prices will be the next strain on household budgets.

Electricity bills have already risen 37 per cent in the past five years, with consumers facing a rise of up to 10 per cent from July 1, with the federal carbon tax feared to cost 10 per cent on top of that.

Andrew Reeves, chairman of the consumer watchdog Australian Energy Regulator, said the wholesale price of gas would at least double in the next five years, adding more than 33 per cent to the average household bill. “Gas prices are only heading up,” he said. “While with electricity it’s the cost of networks, with gas it’s about supply, and NSW will start to suffer soon.”