Changes to energy rules pushed back until March 2027 after a furious response to a draft policy

Jacinta Allan has announced a major shift in the push to reduce gas use in homes and has touted the change as a good result for “workers, renters and families”.

Under the government’s initial plan, it had wanted to force households to switch gas cooktops to electric models.

Hundreds of thousands of Victorians will no longer have to switch gas heating systems to electric models when they expire, under a major Allan government backdown.

Hot water systems that reach their end of life will have to be replaced with efficient electric appliances, such as heat pumps, under a watered-down plan to phase out household gas — but with exemptions if installation is too expensive.

Premier Jacinta Allan has backed down on the government’s gas plan. Picture: Aaron Francis

Landlords will face tougher rules — albeit with the same exemption — with the Government saying they have to replace gas heaters at their end of life with reverse-cycle air conditioners.

All changes to energy rules, which were due to kick in next year, have also been pushed back to March 2027, after a furious response to a draft policy.

Under the government’s draft plans to electrify buildings in Victoria, it had wanted to force households to switch expired gas cooktops, heaters and hot water appliances to electric models.

The change was part of a net-zero emissions plan, which also meant new homes that required a planning permit banned from hooking up to the gas network.

Premier Jacinta Allan backed down on cooktops last year, carving out the popular kitchen appliances from a regulatory impact statement.
Now, Cabinet has backed a scheme where gas heaters, such as ducted systems, will also be removed from the rules.

While owner-occupiers would have to replace hot water systems once they expire under the watered-down approach, they would still be able to repair gas systems if they break down.

Gas hot water systems can be repaired if they break down. Picture: Brenton Edwards

The Government says the stricter rules for landlords is about helping renters in a “cost-of-living crisis”.

Demanding old gas heaters be replaced with efficient electric models is part of a suite of tougher rental conditions and laws that also force landlords to install more efficient shower heads and insulation.

The backdown on gas heaters in owner-occupier properties and securing exemptions for hot water systems is a major win for the gas and energy industry.

They argued that switching hundreds of thousands of people to electricity in the short term would put pressure on the grid as it transitioned away from coal-fired power.

The government says households would save money from getting off gas, and that a reduction in household consumption would help industry and manufacturing shore up much-needed supply.

On Tuesday, the Government is set to release a Gas Security Statement outlining how extra supply would be quarantined for local use, safeguarding manufacturers when the state is expected to face shortfalls from 2029.

It will continue to advocate for people to voluntarily switch to electricity, arguing it would save them money in the long term.

Premier Jacinta Allan said the changes were a win-win.

“Families will pay less on their energy bills, industry will get the gas it needs – and Victorian jobs are protected. It’s good for industry, workers, renters and families.”

Ms Allan says families will pay less on their energy bills. Picture: Diego Fedele

A ban on new homes from connecting to the gas network has also been widened by the government, with all new buildings now unable to connect to the network, not just those needing a planning permit.

This is also the case for new commercial premises; and from January 1, all new commercial buildings other than industrial, manufacturing and agricultural buildings, will be required to be built all electric.

The government says electric hot water systems save households about $330 a year, or $520 with solar. They could also be subject to generous taxpayer-funded grants.

The Government says the use of LPG for households or business can continue under its plan.

Even under watered down rules, the Government says by 2029 there will be about 12 petajoules of gas every reduced in households and businesses, which will help fuel industrial demand.

Energy Networks Australia backed the changes.

“The decision to exclude heaters is the right one for Victorians as our independent modelling showed that in the depths ofwinter, electricity wholesale prices would have increased significantly for everyone if all Victorians suddenly moved theirheating from gas to electricity before the system is ready,” a spokesperson said.

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Originally published as Changes to energy rules pushed back until March 2027 after a furious response to a draft policy