The Australian Energy Market Commission (AEMC) is seeking feedback on a more preferable draft rule that proposes requiring newly connecting retail gas customers to pay the upfront cost of their connection, moving away from the current system where these costs are often shared across all customers.
The draft determination responds to a rule change request from Energy Consumers Australia and addresses challenges created by declining gas demand projected by the Australian Energy Market Operator.
The proposal aligns with the AEMC’s strategic narrative, which focuses on how the gas regulatory framework can best support consumers and the electricity system during the transition to net-zero emissions.
Under the current framework, when a new customer connects to the gas network, the connection costs are typically added to the gas distributors’ capital base and recovered from consumers over time. However, as fewer people use gas and more customers disconnect from networks, the remaining customers increasingly bear the cost of connections that may not be fully paid off.
AEMC Chair Anna Collyer said the proposed changes would particularly help to protect lower-income households, renters and apartment dwellers - who often face barriers to electrification - from bearing the costs of new connections as other users decide to leave the network.
“The existing approach was designed for growing networks, but it’s no longer fit for purpose in a context where gas demand is projected to decline, Ms Collyer said.
“Our preferable draft rule proposes ensuring that the people who benefit from new connections are the ones who pay for them while protecting existing customers from increased network costs.”
The draft rule is supported by AEMO’s Gas Statement of Opportunities and distributors’ own demand forecasts, with AEMO projecting distribution-connected residential and commercial demand will fall by around 30 per cent in the next 10 years and 70 per cent over 20 years.
“This is about giving customers better price signals so they can make informed decisions about their energy choices,” Ms Collyer said.
“Customers will still be able to connect to gas if they choose to, they'll just pay the true cost of connecting upfront rather than having those costs spread across all gas users."
If implemented following consultation, our rule would apply to new retail customers connecting to the main gas distribution networks in the ACT, NSW, South Australia and some Queensland gas distribution networks from 1 July 2026.
It would maintain existing consumer protections, including standardised pricing for basic connections and regulatory oversight by the Australian Energy Regulator.
The proposed changes aim to:
- prevent new gas connection costs from being added to gas distributors’ capital bases, protecting existing customers from rising network costs
- provide clearer price signals to help customers make informed decisions about their energy choices
- support a more equitable allocation of costs and risks in the energy transition.
As part of the energy system's transition to net zero emissions, the AEMC has published a separate consultation paper today on related rule change requests addressing capital expenditure criteria, depreciation, asset redundancy and planning requirements for gas distribution networks in the context of projected declining demand.
The AEMC is seeking stakeholder feedback on the draft determination until 30 October 2025. A final decision is expected by 11 December 2025.
Visit the project page for more information and contact details.
Media: Jessica Rich, 0459 918 964, media@aemc.gov.au