Gas vs electricity: time for a rethink?

Gas has long been cheaper than electricity, but that may be about to change. So is it time to switch?
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01.Gas costs catching up to electricity

Couple relaxing in front of flame heater

The average gas consumer in NSW is expected to pay between $135 and $226 more each year on their gas bill through to June 2016, following a draft decision from the Independent Pricing and Regulatory Tribunal (IPART) allowing for an average 17.6% increase in regulated retail gas prices.

And Victorians may pay up to $170 more per year through 2020.

Gas is better for the environment than electricity and has traditionally cost less when it comes to heat and hot water, but gas prices are rising fast. 

With Australia set to become an exporter of liquid natural gas, future price hikes appear to be on the horizon for all eastern states. Meanwhile, electricity prices are expected to stabilise in the coming years after a run of sharp increases.

So does this mean it’s time to re-think the conventional wisdom that heating or cooking with gas is cheaper? 

According to a recent analysis by the Alternative Technology Association, consumers who have a single gas appliance will save $200-$300 each year in fixed gas charges if they switch to an electric unit. However, CHOICE is not recommending that consumers jettison their gas appliances based on these forecasts alone, especially since the cost of a new electric appliance will at least partially offset any energy savings. 

And switching to electric heating for larger homes may be problematic, since electric heaters are limited to 2.4kW of power.

Then there’s the environment to consider. Using gas appliances generates about two-thirds less carbon emissions compared with electricity. 

At the least, though, it’s probably time to look at electricity versus gas in a new light. Consider these figures in particular:

  • 1% – the average annual increase in household electricity prices in NSW and Victoria in real terms (or 3% including inflation) over the next five years.  (Source: Australian Energy Market Operator; Alternative Technology Association) 

  • 5% – the average annual increase in household gas prices in NSW and Victoria over the next five years. (Source: Alternative Technology Association) 

  • $170 – the average annual increase in is household gas costs for Victoria over the next five years. (Source: The Grattan Institute)

  • $180 – the average annual increase in is household gas costs for NSW through 2016.  Costs could stabilise or increase more after this.  (Source: The Grattan Institute)


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