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Our gas challenge: the role of gas in Victorian households

29 Aug 2014

Natural gas in Victoria is the main source of energy for residential heating, cooking, and hot water. Our use of gas has been built on a history of plentiful supply and relatively low and stable prices. However, the construction of export facilities in Queensland will link Australia’s eastern gas market to the international market for the first time, making wholesale gas prices both higher and more volatile.

Higher wholesale prices will flow on to higher retail prices – and as the biggest residential users of gas in Australia, Victorians households will be more affected than households in any other state. Many are unprepared for price increases.

Our Gas Challenge brings together the most comprehensive and current information about Victorian residential use of gas published at the time of writing. Section 1 introduces the report, and Section 2 provides a brief history of gas in Victoria. Section 3 details the number of Victorian households using gas, what type of gas they use, where they use it, and differences in consumption by tenancy, income, and dwelling type. Section 4 examines how much gas Victorians use, and Section 5 what for. Section 6 explores how much Victorians spend on gas and what concessions are available, while Section 7 looks at gas expansion in regional Victoria. Finally, Section 8 analyses the implications of the information for policy makers and identifies key areas to address.

The average Victorian household spends around $1,200 per year on gas, and retail prices are expected to rise by 24% by 2015. Increases in average gas bills of $300 per year may find many unprepared, in particular, low income and vulnerable households, renters, and social housing tenants.

The effects will be felt widely: over 90% of Victorian households have either a mains gas connection or use liquefied petroleum gas (LPG) or bottled gas. Close to two million households will face higher prices and higher bills, across income levels and regions.

Consumers are not sufficiently aware of the rising price trajectory of gas or its implications for them. The Victorian Government needs to address this issue as a priority. The role of gas as a continuing cheap alternative to electricity is in doubt, and both consumers and the Government must revisit their attitudes toward gas.

Governments have a role in providing information to consumers to help them make better choices about appliances and gas contracts, encouraging consumers’ uptake of energy efficiency measures, and assisting consumers who are vulnerable or face barriers to taking action (e.g. renters, social housing tenants).

Recommended responses include: information and education campaigns; appliance energy and labelling schemes that allow cross-fuel comparisons; research into the relative life cycle costs of electric vs. gas appliances; energy efficiency programs targeting high energy users; re-assessment of current energy schemes and concessions to ensure their appropriateness; and upgrades to housing stock.

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