Need to know
- Under the current National Gas Rules, the costs of connecting new customers to the gas network are shared among all gas customers
- With fewer and fewer customers using gas, those costs will go nowhere but up
- Energy Consumers Australia has proposed that only developers and new customers should pay the upfront costs of gas connections
It's no secret that gas as a household energy source is on the way out in Australia. Electricity is cleaner and safer, and electric hot water and air conditioning systems are now generally cheaper to run than their gas-powered counterparts.
It's expected that by 2043 we'll be using 72% less gas than we are now. By 2050 we probably won't be using any. The transition to an all-electric world is in full swing.
So where does this leave customers with gas appliances who aren't in a position to go electric, like the approximately 2.9 million households that rent in Australia? In a tight spot is the short answer.
Why should our bills go up because a developer decides to hook a new housing tract up to the gas network?
With fewer and fewer customers using gas, the costs of being connected to the gas network – which make up about half of the average household gas bill – will go nowhere but up.
That's because of a cost factor buried in the weeds of our complicated energy market. Under the current National Gas Rules, which apply throughout most of Australia, the costs of connecting new customers to the gas network is shared among all gas customers, not just the new customers or the developers who built the neighbourhoods they live in.
Why should our bills go up because a developer decides to hook a new housing tract up to the gas network, just to give prospective home buyers that option?
The change would require developers and new customers connecting to the gas network to pay the full upfront costs of connecting
The inherent unfairness is why the advocacy group Energy Consumers Australia (ECA) recently proposed to the Australian Energy Market Commission (AEMC) that the gas rules be amended.
The change would require developers and new customers connecting to the gas network to pay the full upfront costs of connecting. Customers who have nothing to do with these new connections wouldn't have to help pay for them.
This is already the way it works in Victoria, but not in the rest of the states and territories subject to the gas rules.
The network costs as much as the gas
As ECA general manager of advocacy and policy Brian Spak explains it, "you pay as much for the network as you do for the gas that's in it".
In other words, we're paying for the pipes in the ground every time we pay our gas bill. Why? Because retailers pass along their gas network tariffs, which are set by the Australian Energy Regulator, to their customers.
"Consumers are at risk of soaring gas bills because the costs of those networks are fixed, and they have to be recovered," Spak says.
"So we'll be facing the same capital cost for the gas pipelines recovered over fewer and fewer customers. On a proportional basis, the remaining users will have to pay more, and there's probably not a lot of customers who are aware of this fact."
On a proportional basis, the remaining users will have to pay more, and there's probably not a lot of customers who are aware of this fact
ECA general manager of advocacy and policy Brian Spak
As an example, most people who have mains gas in NSW get it from the Jemena gas network. If a new subdivision is built in the state, the costs for its gas infrastructure are shared among all Jemena customers in NSW, not just the developer and the new residents.
"We think this practice is outdated and no longer fit for purpose," Spak says.
As the number of gas customers declines, "we don't want to make that fixed cost even bigger".
The proposed change should prevent gas bills from continuing to climb.
Will the proposed change mean lower gas bills?
Not necessarily, but it should put the brakes on bills going higher.
"It just means that they would be lower than they otherwise would be," Spak says. "They'll definitely be lower than they would be if the rule change doesn't go through."
In ECA's latest national consumer survey, one in three homeowner households using mains gas said they will probably go off it within the next 10 years. But whether owners who rent out their homes will make the change for the benefit of their tenants is another question.
"We're trying to protect the last people who will be using the gas network," Spak says.
"We don't want to make the cost they have to bear in the future any bigger than it needs to be. So that's fundamentally what this rule change is about – taking the cost of new connections away from the whole customer base and putting it on just on the newly connecting customers."
More moves toward a fairer market
The ECA proposal comes as the AEMC is taking other steps to protect energy customers.
Earlier this month, the regulator announced a rule change to take effect on 1 July 2026 that will prevent energy retailers from raising prices in market contracts more than once every 12 months.
The change also takes aim at the practice of punishing customers for their loyalty by requiring retailers to charge no more than the regulated standing offer price once the benefits in their current plan change or expire. As it stands, retailers can keep customers on pricier plans indefinitely, and they routinely do.
Unreasonably high fees and charges as well as steep late payment penalties will also be banned as of mid next year.
Spak says the proposed gas rules change is just part of making sure that the last remaining customers aren't unfairly charged for maintaining the entire gas network.
"There's lots of problems with the gas rules and gas policy in general that will need to be addressed. The last consumers using the gas network will most likely be the people who are least able to get off it. We really don't want them to be left paying really high bills, so we need to fix lots of things to prevent that from happening. But this proposed change is an important first step."
ECA's proposed rule change is currently in the consultation phase. Submissions to the AEMC can be sent until 10 July 2025.
We're on your side
For more than 60 years, we've been making a difference for Australian consumers. In that time, we've never taken ads or sponsorship.
Instead we're funded by members who value expert reviews and independent product testing.
With no self-interest behind our advice, you don't just buy smarter, you get the answers that you need.
You know without hesitation what's safe for you and your family.
And you'll never be alone when something goes wrong or a business treats you unfairly.
Learn more about CHOICE membership today
Stock images: Getty, unless otherwise stated.
