In regional Victoria, 10 towns are currently getting a harsh preview of Australia’s energy future. The local gas supplier announced it will shut down its network by the end of 2026, leaving residents scrambling to replace their appliances.
For these households and small businesses, the transition away from gas is no longer a distant policy debate. It is a sudden, expensive reality.
Electrification across Australia is accelerating rapidly. People are making the switch because electric appliances are cheaper to run, more efficient, and better for their health.
But as more households leave the gas network, a massive financial problem is brewing underground. Gas networks rely on huge, fixed infrastructure costs. Under the current rules, when one household disconnects, the cost of maintaining those pipes does not disappear. It simply shifts onto the shoulders of the neighbours who remain connected.
This creates a profound fairness problem. Households and small businesses already provide around 90 per cent of gas distribution network revenue, even though they account for a much smaller share of total gas use. As the customer base shrinks, we risk trapping a residual group of consumers with an ever-growing share of the bill.
These “captive” customers are often those least able to leave. They are renters who have no legal right to change their appliances, apartment dwellers tied to shared hot water systems, and low-income families who cannot afford the upfront cost of electrification. It is neither reasonable nor fair to expect these households to underwrite the decline of a shrinking system.
We need to stop treating the gas transition as something that’s just happening to us and start recognising it as a problem we need to actively design for. Not all transition costs are created equal, and we must distinguish between them to find a fair path forward.
First, there are unavoidable costs. Gas networks still need to be kept safe and reliable for as long as people need them, and paying for basic safety maintenance is a necessary reality of managing the transition.
Second, there are inefficient and completely avoidable costs. Our current regulatory system was built for perpetual expansion. It still rewards gas companies for replacing legacy pipes. We must stop pouring consumer money into new infrastructure that will be obsolete before it is paid off.
Third, there are the costs that come from poor planning. When a gas network shuts down without coordinating with the local electricity grid, we risk paying twice. Unplanned, ad hoc disconnections drive up the need for reactive, expensive upgrades to the electricity system.
The real challenge is deciding how to share the costs of this shrinking gas system fairly and transparently.
Right now, gas companies are trying to manage their financial risk by asking regulators for permission to recover their investments faster, which drives up prices for today’s consumers. Tweaks to depreciation schedules and hiding the costs in complex regulatory formulas is not a sustainable solution.
We cannot expect investors to take a total loss on assets built under approved government rules, but we also cannot expect the last consumer left on the street to pay exorbitant tariffs to keep a failing business model afloat.
The burden of a dying industry must be shared proportionately between network investors, governments, and consumers.
Australia needs a coordinated strategy to manage this decline. This means putting an end to inefficient spending, mandating transparent network planning, and designing a framework that shares the financial burden equitably.
As Energy Consumers Australia’s outlined in its recent Power Move report, we’ve reached the point where further inaction on this issue is not an option.
Australia needs to actively plan for the future of the gas network – one that means households and small businesses won’t face escalating bills as the demand for the gas network decreases.
That also means a clear national electrification roadmap to help households and small businesses get off the gas network over time, with support to switch to efficient electric alternatives where it makes sense.
We can’t promise a transition without costs. But we can design one that is orderly, transparent and fair, so the heaviest burden isn’t carried by those least able to pay.
Claire Ohk is manager of consumer advocacy at Energy Consumers Australia
