Bronwyn Batten built her home at Thirroul, north of Wollongong, a decade ago and accepted a gas connection, hot-water system and stove as part of the package. She now calls that a costly mistake and wishes a gas ban had been in place then.
"If I was doing it today, I'd be so much more informed and not wanting to go with those choices," Batten says.
She is part of a growing movement of households voluntarily disconnecting from the gas network. Batten has spent tens of thousands of dollars on electrification, including solar panels, a battery, an electric vehicle and, in the final push, replacing her gas hot-water system and stove and severing the connection. She took part in Electrify 2515, a partnership between Rewiring Australia, Brighte and Endeavour Energy, with federal funding, aimed at electrifying an entire suburb.
Getting off gas was "a no-brainer in terms of saving people money" as well as reducing health impacts and emissions, she says: "It just makes no sense whatsoever to be having new connections."
The scale of the shift is large. The Australian Energy Market Operator forecasts residential and small commercial gas demand on the east coast will fall by about 79 per cent over the next 20 years. Victoria will ban gas in new builds from January 1, 2027, with a separate ban on gas hot-water systems to follow, unless a change of government overturns it. In NSW, about a dozen council areas, mostly in Sydney, have similar bans.
That raises the question of who pays for the gas network as the customer base shrinks. The Australian Energy Market Commission issued a draft rule in August, to be finalised in December, that would let gas networks recover more of their costs from today's customers rather than future ones. Chair Anna Collyer acknowledged this could bring price rises: "For some gas networks, this could mean modest cost increases for those who continue to use gas in the near-term."
"This gives gas providers a reasonable opportunity to recover their past investments, while reducing the risk of high and volatile prices for future consumers," Collyer said. "It would also support a safe and reliable future gas supply for those customers that continue to rely on gas."
The draft drew about 30 submissions, including a joint response from Energy Consumers Australia and 13 other consumer, social justice and environmental groups. Chief executive Dr Brendan French said the proposal put all the responsibility for covering the capital charge on consumers: "We think this is not the correct approach, and we're quite animated by it because we feel that it puts 100 per cent of the responsibility for covering this capital charge onto consumers, so it shifts all of the risk from investors in the gas networks to everyday mum-and-dad and small-business consumers today."
The Australian Energy Regulator also opposes the proposal, saying it "carries the risk of consumer harm" because it reweights the regulatory framework in favour of network providers recovering capital costs. While the AER would still have to approve price rises, it says it has limited power to knock back proposals that comply with the rules set by AEMC. It rejected the assumption that networks would moderate price rises to avoid driving customers away, noting recent reviews had included networks pitching large accelerated depreciation proposals that, if approved, would have significantly increased customer bills.
Collyer said the draft package also lets the regulator reduce the value of a provider's asset base so consumers don't pay more than necessary. "While gas providers would be able to recover some of their investment earlier upfront, this means that they have no cost-recovery guarantee for past and future investments." The AER says the conditions for that power to be triggered are not workable.
The gas industry supports parts of the draft but opposes the asset write-down power because of uncertainty. Dominic Adams, chief operations officer of Energy Networks Australia, compared the problem to friends on a long-term share-house lease: "Then two of them leave, and the others can't find other tenants. What is the fair [amount] that everyone should pay going forward?"
Adams noted that two years ago Victorian residential gas demand looked set to decline rapidly, but with a state election looming, "we might find ourselves in a future where a new government has a very different gas policy, and there would be very different outcomes". Energy Networks Australia has no position on residential gas bans, but member Australian Gas Infrastructure Group has lobbied to overturn the Victorian bans.
Consumer advocates worry the people left paying will be those who cannot afford to electrify, including low-income households and renters.