Submission to AEMC Updating the regulatory framework for gas connections draft determination

The Justice and Equity Centre made a submission to the Australian Energy Market Commission’s (AEMC) Draft Determination on updating the regulatory framework for gas connections. We broadly support the draft determination and note that the concept of upfront cost-reflective connection charges received broad support from stakeholders. This rule change is an important step in ensuring the regulatory framework for gas networks is fit for purpose, especially when paired with the other gas network related rule changes that the AEMC is currently considering.

Current practice sees the costs of new gas connections effectively ‘socialised’ among all gas users. This practice is predicated on efficiency assumptions which depend on growth. This exacerbates cost increases for existing consumers, moreso as demand declines and disconnections increase. 

We advocate for and anticipate that jurisdictions in Australia will phase out new residential gas connections over the coming years. However, we consider that a shift to fairer cost-reflective recovery for connections costs is justified regardless of the expected future for gas networks, as it contributes to efficient decision making and ensures the relative cost-benefit of new gas connections is clearly and accurately signalled.