Energy giant AusNet plans to slug gas customers an extra $70 million to compensate for the growing number of Victorian customers switching to electricity.
AusNet is proposing to charge residential customers an average of $49 per year more until mid-2028 because fewer customers are using gas.
AusNet has applied to charge gas customers more as Victoria electrifies.Credit: Bloomberg
Under a five-year agreement with the Australian Energy Regulator (AER), AusNet can claw back $105 million from gas customers as compensation for the state’s push to switch households from gas to electricity.
However, AusNet is taking the unprecedented step of seeking to increase that to $175 million.
It argues that government policies such as a ban on new gas connections in dwellings had “materially changed” its operating environment.
“Importantly, the customer number forecast approved by the AER had our residential customer numbers growing strongly throughout the regulatory period. This continued growth is no longer a credible forecast,” AusNet said.
Gavin Dufty of St Vincent de Paul.Credit: Dominic Lorrimer
“We are already seeing these policy changes impact our network with the projected rate of gas reticulation declining significantly, a rapid take-up of electrification incentives and increasing abolishment and dormant connections.”
The energy regulator is seeking submissions on AusNet’s proposed change to its access agreement, and is expected to decide on the request in around May next year.
The AER has noted the likely impact on AusNet’s customers and that an increase in charges could set a precedent.
“The novelty of this process, and the relevance of the issues raised for other gas network service providers, policy makers and customers, also contributed to our decision that this is a material variation proposal,” the AER said.
Natural gas.Credit: Alessia Pierdomenico
Gavin Dufty, national director of energy policy research at St Vincent de Paul, said the dispute centred on who should foot the bill as Victoria electrified.
“There are no new connections being bolted on to the gas network. And people are jumping off because the government has got subsidies to get people off,” Dufty said.
“AusNet is saying, ‘The pact has changed, our demand forecasts are wrong because of the government policy. We need to up the price for the people who are left’.”
Dufty said the standoff risked leaving the vulnerable with excessive bills.
“What happens to people that live in flats with reticulated gas that can’t be electrified?” he said.
“What happens to small businesses that are running restaurants with gas burners? What happens to people who built a house two years ago and connected to the gas network?”
Dufty said the best-case scenario was all parties – energy companies, consumers and the government – chipped in.
Victoria is the Australia’s biggest burner of natural gas, accounting for 65 per cent of the nation’s residential use.
The state government says shifting from gas to electric is key to meeting Victoria’s nation-leading emissions reduction targets of 75 to 80 per cent by 2035 and net zero by 2045.
State opposition energy spokesman David Davis said Labor’s “disastrous war on gas” meant Victorian households and businesses would pay more despite the cost-of-living crisis.
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