The Australian Energy Market Commission is proposing updates to the rules that govern how gas networks are regulated, with a package of draft reforms to better safeguard and support consumers as their gas needs change now and into the future.

Thousands of Australians are switching from gas to electricity. At the same time, many continue to use gas and may face financial, technical or other barriers to switching to another energy source at home or work. These consumers, including low-income households, renters, residents in apartments and small business and industrial customers, will remain on the gas network, and will rely on gas for some time.

Why is change needed now?

Until recently, the National Gas Rules did not account for people leaving the network. Gas networks are expensive to build, and were designed to last for decades, with gas customers now and long into the future assumed to help pay for, and benefit from the network. 

With a more complex outlook, it is important the regulatory framework can accommodate a range of future scenarios.

As consumers leave the gas network, the costs are borne by those left behind. If too many people leave too quickly, there is a risk of significant price increases for remaining consumers. If this triggers further consumers to depart, gas service providers may be unable to recover their investments, meaning they no longer have the incentive to provide reliable and safe gas and may decide to discontinue their services. 

These ‘early exits’ of service providers would leave customers who face barriers to switching, without gas, and would be costly to communities, governments and industry. 

 The AEMC’s draft package, released today, introduces a suite of reforms that work together to address these challenges, with new transparency requirements for service providers, better tools for regulators, and measures to keep prices reasonable over the long term.

AEMC Chair Anna Collyer said the proposed changes would mean safe and reliable gas supply for those who need it and better safeguards for consumers who remain on the gas network in the years to come. 

“Our draft package lays the foundations for an orderly, consumer-led transition that puts households and businesses in the driver’s seat,” Ms Collyer said. 

“Despite uncertainty about future gas demand, government policies and transition timelines, we cannot afford to delay action, it will only allow the problem to grow, become more costly, and harder to resolve”.

A longer-term outlook

One of the most significant updates in the AEMC’s proposal is to introduce a 20-year outlook alongside the 5-year regulatory framework for gas network arrangements.

This would introduce new requirements for service providers and the regulator to demonstrate they have considered the long-term impacts of the transition on customer services when developing proposals and making decisions. This means issues can be identified early, while there is still time to respond.

Keeping prices reasonable over the long-term 

A key feature of the draft reforms is to better align the recovery of costs with the expected use of the network over time. As part of this, the AEMC is proposing that the service provider and regulator must consider the most efficient approach to recovering costs. For example, considering the period over which gas network investments are recovered so that cost recovery and ongoing service provision remain sustainable for longer.

For some gas networks, this could mean modest cost increases for those who continue to use gas in the near-term, giving gas providers a reasonable opportunity to recover their past investments, while reducing the risk of high and volatile prices for future consumers. This, in turn, would ensure service providers can continue to provide safe and reliable supply of gas for as long as consumers and communities continue to rely on it. 

Ms Collyer said critically, if consumer demand falls significantly and parts of the network become underutilised, the costs of these assets will not be transferred to households and businesses. 

“Service providers have a strong incentive to price reasonably - if gas costs more than the alternatives, customers will switch,” Ms Collyer said.

“However, if recovering the full cost of the network would push prices beyond what customers would pay for an alternative energy source, there would now be tools for the regulator to intervene.”

“In this scenario, our draft package provides the regulator with the tool to reduce the value of a service provider’s asset base, meaning a clear reduction of prices for consumers if some parts of the network become underused.”

The AEMC is also proposing measures to minimise the risk of future cost increases. One of these is to strengthen existing provisions to minimise unnecessary expenditure being passed from networks to consumers, by using forecast demand, instead of existing demand, to justify costs.

 Part of a broader package

This draft rule is the latest in a series of reforms from the AEMC to ensure the regulatory framework for gas networks is fit for the future. 

This includes the Commission’s recent rule changes on gas connections, and disconnections and consumer-led abolishments. Together, these reforms support a range of consumer experiences and choices, for an orderly transition.

The role of governments 

Regulatory reform alone cannot address all the impacts of an uncertain gas future.

The AEMC has called out the role of governments to support an orderly transition beyond the draft rule changes. Potential actions outlined in today’s draft package include addressing policy barriers and targeted support for consumers.

Next steps

The AEMC is now seeking feedback on the draft rules. The Commission will consider all feedback before publishing a final determination and final rule, expected in December 2026. 

Submissions are due 8 October 2026. 

About the AEMC  

The AEMC is Australia's independent energy market rule maker. We make and amend the rules that govern electricity and gas markets, conduct reviews of the energy sector, and advise Australian governments on energy market development. Our work is guided by the long-term interests of energy consumers - including reliable, safe and affordable energy.  

Visit the project page for more information and contact details. 

Media: Michelle Stone 0459 918 964, media@aemc.gov.au