Ten regional Victorian towns are being forced off gas next year after Solstice Energy announced it would shut down supply to around 1,145 homes, saying the isolated gas networks have become too expensive to operate.
Residents in Marong, Heathcote, Swan Hill, Maldon, Robinvale, Kerang, Nathalia, Terang, Lakes Entrance, and Orbost now face a choice between switching to bottled LPG or rapidly trying to electrify their homes.
But on-the-ground reports from Environment Victoria show widespread anger, confusion and anxiety about a transition they didn’t ask for, weren’t prepared for, and aren’t being adequately supported through.
Many residents don’t even know when the phase-down will begin for their town, Kat Lucas-Healey told the SwitchedOn podcast “A town might only get six months to know that they’re up next and to figure that out.”
“The Solstice energy case provides an early indication of what a pretty unplanned gas retreat looks like, and it’s not a very good outcome for the people.”
A decade old promise that was never real
The shock is amplified by the fact these networks are relatively new. “They’re only just over a decade old, and for some people … they might be living in a house that’s only a couple of years old.”
“They’ve paid for all these new gas appliances, and they really had no idea that this was on the cards.”
When newer residents bought their homes, nothing indicated they were being connected to an isolated gas network, where compressed gas gets trucked into town.
The networks were built under the Energy for the Regions program, an initiative of the previous Baillieu-Napthine government in Victoria, in the early 2010s, which promised regional Victorians cheaper gas.
But those promises collided with the ramping up of gas prices and the project struggled from the outset.
“The gas was always quite expensive, and then it just got more and more expensive over time,” says Lucas-Healey. “It was actually never commercially viable to begin with. But it was popular, and it was touted as this great thing for regional towns.”
“It was really just a white elephant from the start”
A big, lost electrification opportunity
Solstice is offering hands-on assistance for customers that want to switch to bottled LPG – they’ll pay for the gas fitter and supply a list of approved fitters. But although customers who want to electrify will receive a payment of around $2000, they will have to “self-manage” the whole process.
“The level of engagement is very different compared to if you’re switching to LPG,” argues Lucas-Healey. “It looks like Solstice are quite keen to just get out of town and not have to worry about this anymore.”
Victoria has incentives and regulatory oversight to support electrification. But households that given only months to overhaul core appliances, it’s not enough. And whilst the State Electricity Commission (SEC) has developed digital tools to help people plan transitions, they’re designed for a transition over time.
“People are getting six months and that’s pretty quick. There’s a lot to get your head around.”
Community groups have stepped in to help, and the SEC has been holding information sessions about electrifying, but Lucas-Healey maintains “a lot’s been borne by the customers themselves.”
What people need right now, Lucas Healey argues, is something “packaged that can help people out…. it’s really about going that step further and taking some of the pain away from people.”
“You can’t just tell people to shop around. People’s eyes glaze over.”
The financial pressure is also real for households that want to electrify and Environment Victoria would like to see cheap loans for new appliances offered as part of a package.
“Quite a lot of the affected people are already in mortgage stress …. if you’re running gas ducted heating off an LPG gas bottle you have to buy a 200 kilogram bottle. That’s a really big outlay.”
The cost of rolling out the compressed gas network also makes the situation harder to stomach. Lucas-Healey says it cost $85 million, “about 70 grand per affected household. Imagine if they had that to help transition [off gas]. You’d get a pretty flash kitchen for that.”
The gas shut down by Solstice is in stark contrast to what happened in Esperance, in Western Australia, when that community was transitioned off gas.
There, every customer was individually consulted, households were offered funding for new electric appliances and advice, along with induction cooking demonstrations, and the WA Government injected around $10 million to support a smooth and fair transition.
As a result, the majority of households opted to electrify.
But given the short timelines, and limited support for electrification, it’s likely many of the Solstice households will choose the option that feels easiest – LPG.
“It’s what a lot of people are going to end up choosing because [electrification] just feels too difficult.”
LPG however isn’t always a straightforward drop-in replacement. The gas is different so some gas appliances will need injectors altered, and regulators or pressure adjustments, and the work must be done by a licensed gasfitter.
What’s coming
Victoria’s Gas Substitution Roadmap has introduced important future protections, including prohibiting gas connections in new homes.
“That’s really, really important consumer protection,” says Lucas-Healey, and will prevent future stranded assets and high bills.
But it arrived too late for the towns now facing shutdown without a plan.
Lucas-Healey says newer gas networks in Victoria are already under-subscribed and increasingly uneconomic, so more retreats are inevitable. The question is whether they’ll be orderly.
“How do we help people prepare? How do we make them aware that this could happen in the next 5,10, 15 years?”
“It comes down to how governments want to plan and set the right rules so that things can happen in an orderly fashion, and that aren’t just putting all of the costs onto people that can least bear it.”
“We all need to start thinking about how we’re going to move on from gas, especially in Victoria, where there’s so many people that are dependent on gas.”
You can hear the full interview with Kat Lucas-Healey on the SwitchedOn Australia podcast.
