This message first appeared in our September 2026 newsletter. To stay up to date with the latest news and research on energy issues that impact consumers, sign up to receive our monthly newsletter below.
It would take quite a feat of argument to convince me that gas networks should now be entitled to recover every dollar of their investment from customers. Networks have expanded their footprint, asset base and financial risk over the last generation, knowing that those pipes were unlikely to have a full economic life.
A prudent gas network would have seen the writing on the wall and constrained its expansion. Instead, networks continued connecting new premises at no individual cost – a developer’s dream – while spreading the expense across current and future customers.
Everybody loses here, except the networks. People moving into new homes can be locked into gas heating, hot water and cooking, while electrification would have been more affordable. Meanwhile, all gas customers pay for that expansion.
Ironically, the networks were best placed to limit that growth, but it took ECA’s rule change, since adopted by the Australian Energy Market Commission (AEMC), to do it.
The networks weren’t blindsided. Whatever future gas may have in firming electricity generation and industry, networks have known for at least a decade that its future in homes and small businesses was at risk. Victorian networks acknowledged in 2016 that better electric appliances and greater customer control in the electricity sector threatened the competitiveness of gas. Yet the regulated asset base has continued to grow.
Some argue that green hydrogen or biogas will step into the void. Australia produces a tiny fraction of the biomass it would need, and even those most bullish on hydrogen recognise it’s not right for homes. We need to live in the world as it is, not as we want it to be.
We sympathise with networks facing billions in unrecovered assets, but consumers should not carry that burden alone.
That is why we are disappointed with the AEMC’s recent draft decision, which would allow networks to recover too much of this investment directly from today’s customers. Put simply, that shifts risk from investors, who understood the changing outlook for gas, to consumers, who did not.
This risk exchange is neither fair nor reasonable. Any institutional investor of the last two decades should have foreseen the capital recovery risk. Instead, customers are being held responsible – and will pay considerably higher gas bills.
The AEMC has said, quite rightly, that governments need to step in. We agree. But until they do, customers should not be the only ones left holding the bill for years of network expansion.
