Submission: Australian Energy Market Commission – National Gas Rule Amendments 2026 (Gas Networks in Transition)

29 October 2025

To: Australian Energy Market Commission (AEMC)
Re: National Gas Rule Amendments 2026 (Gas Networks in Transition)
 

Thank you for the opportunity for the Institute for Energy Economics and Financial Analysis (IEEFA) to provide input to the AEMC’s issues paper Gas Networks in Transition.

IEEFA is an independent energy finance think tank that examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

In recent years, increasing certainty has emerged around the direction of reticulated gas demand in Australia, with most forecasts now pointing to a decline, particularly driven by residential customers. Nonetheless, uncertainty remains around the pace of this decline – which is likely to be influenced by a combination of underlying economic factors and government policies.

Declining customer numbers and gas volumes may place gas network assets at risk of becoming stranded. This has been recognised by gas distribution network operators and the Australian Energy Regulator. However, the existing National Gas Rules are not designed for such a scenario, and the response to these risks has so far been reactive, lacking consideration of prudent risk management principles.

IEEFA notes an emerging trend to address stranded asset risks by transferring them from networks to customers – whether via accelerated depreciation or changes to the broader form of regulation. This is problematic as a case has not been presented to suggest that gas networks are disadvantaged under the current risk allocation. Rather, there is evidence to show that the existing risk allocation has enabled the extraction of significant supernormal profits from consumers.

In broad terms, IEEFA considers the rule change requests proposed by Energy Consumers Australia and the Justice and Equity Centre are steps in the right direction. The additional matters identified in the AEMC’s issues paper are also worthy of consideration. The National Gas Rules will need to become fit for purpose to enable an efficient, safe and equitable phase-down of gas infrastructure.

Specific points relating to the rule change proposals in this issues paper are outlined below.

Kind regards,

Jay Gordon
Energy Finance Analyst, Australian Electricity

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