Victoria’s ban on gas appliance rebates is a win for energy consumers

Victoria will prohibit gas distribution networks from providing customer rebates or incentives to purchase new gas appliances.

While a rebate on the upfront cost of a new gas appliance may appear appealing to customers, they ultimately benefit gas networks far more than they benefit gas consumers.

Analysis from the Institute for Energy Economics & Financial Analysis (IEEFA) shows that when both upfront and ongoing running costs are considered, Victorians are locking in nearly $900m in unnecessary lifetime costs for each year that new gas appliances are installed rather than efficient electric alternatives.

Gas appliance rebates only reduce the upfront cost of an appliance, but this is small compared to the running costs, which on average make up 75% of the cost of ownership.

In Victoria around a third of those running costs are passed back to gas networks. In some states, network charges make up an even higher portion proportion of gas bills; exceeding 60% in Queensland and Tasmania.

Victoria’s policy to prohibit these rebate schemes is a sensible step, but it highlights a broader underlying issue. Under our current regulatory system, gas networks are incentivised to sell more gas to more customers at a time when we need to be planning for a managed phase-down.

Gas is no longer the cheap household fuel it once was. A typical Victorian home could save $1,200 a year on their energy bills by replacing their appliances with electric alternatives.

Sensible state and federal policies can help consumers in the transition to efficient electric appliances, and there is an increasingly strong case for a more holistic plan to manage the phase-down of gas distribution networks.

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