On 19 March 2026, the Commission published a directions paper for the Gas networks in transition rule change project. The directions paper sets out the Commission’s proposed policy direction for reforming the gas pipeline economic regulatory framework in the National Gas Rules (NGR) so it remains fit for purpose in the context of declining and/or uncertain future gas demand.

The Commission’s proposed direction encompasses four key areas:

• Employing a longer-term outlook to manage uncertainty by requiring service providers and the regulator to demonstrate how longer-term transition risks and impacts have been considered within and beyond the access arrangement period.
   
• Amending capital cost recovery provisions (depreciation, compensation for inflation, redundant capital and re-use of redundant capital provisions) to support more efficient capital cost recovery to mitigate risks to consumers and service providers under the energy transition.
   
• Amending capital and operating expenditure provisions to minimise expenditure while continuing to support safety and reliability.
   
• Amending reference tariff provisions to help service providers and the regulator design economically efficient reference tariffs and tariff variation mechanisms that accommodate a broader range of demand scenarios.

The Commission's proposed changes would apply to scheme transmission and distribution pipelines regulated under the NGR, as adopted in each jurisdiction. This includes scheme pipelines in the east coast gas system, regulated by the Australian Energy Regulator (AER), and scheme pipelines in Western Australia, regulated by the Western Australian Economic Regulation Authority (ERA).  

The Commission is not proposing changes to access arrangement period lengths or reopener provisions at this stage and does not propose to establish a decommissioning framework as part of this rule change process. However, the Commission recognises that decommissioning raises complex issues that may require coordinated action by governments, regulators and other stakeholders beyond the NGR.  

The Commission will also consider the need for additional or modified incentives after considering stakeholder submissions on our package of proposed NGR amendments.  

The Commission is seeking stakeholder feedback on the proposed directions outlined in the directions paper. Submissions close on 30 April 2026.  

We will hold a public forum on 9 April 2026. We invite stakeholders to register here.

Project timeline

Background

The Commission initiated the Gas networks in transition rule change process in response to four rule change requests submitted by Energy Consumers Australia (ECA) and the Justice and Equity Centre (JEC). ECA submitted its rule change requests on 14 February 2025, and JEC submitted its rule change request on 4 June 2025. The rule change requests relate to the following aspects of the economic regulatory framework for gas pipelines:

• Depreciation. ECA propose stronger conditions on when gas distribution service providers and the regulator can accelerate the recovery of capital costs through changes to the depreciation criteria.  
• Capital and operating expenditure. ECA propose changes to the capital expenditure (capex) provisions and operating expenditure (opex) definition to ensure that only efficient expenditure is incurred and paid for by gas consumers in the context of declining demand.  
   
• Planning requirements. ECA propose new planning reporting obligations on gas distribution service providers to provide regulators, governments, electricity networks, and other stakeholders with information required to understand the opportunities to minimise expenditure and energy system costs.  
   
• Accelerated depreciation and redundancy. JEC propose changes to the depreciation and redundant asset provisions. Their proposed changes would prohibit the use of accelerated depreciation to manage stranding risks in combination with the use of the capital redundancy provisions. JEC further propose to cap the customer contribution to 50 per cent, in the case of a cost sharing arrangement.  

On 18 September 2025, the Commission published a consultation paper jointly consulting and seeking stakeholder feedback on the issues raised by the two rule change proponents. We also sought stakeholder feedback on whether there was a need to address several interrelated aspects of the gas pipeline economic regulatory framework. We received 26 responses to our consultation paper, with some stakeholder submissions also identifying a range of additional issues.  

The Commission decided to consolidate the ECA and JEC rule change requests. We considered that the breadth and interrelated nature of the issues considered in our consultation paper and raised by stakeholders requires a holistic approach when considering changes to the NGR. The gas pipeline economic regulatory framework comprises various interrelated elements that operate as a package to promote the National Gas Objective (NGO). In developing our proposed direction for reform, we have: 

-assessed different policy options in terms of promoting the NGO and consistency with the Revenue and Pricing Principles under the National Gas Law, and

-considered the implications of our proposed changes holistically across thein terms of consistency across the gas pipeline economic regulatory framework.