Would you pay $1000 to get off gas? Consumer dismay over disconnection cost

Anneliese Alexander and husband Stuart were thrilled: their ageing gas cooktop had finally been replaced by an induction version and, after a decade of retrofits, they had an all-electric home.

The couple wanted to reduce their energy costs and carbon emissions, so they installed solar hot water, a heat pump and removed their gas room heater.

Anneliese Alexander’s home has been converted to full electric, but she is expected to pay $1151 to permanently disconnect from the gas supply.Credit:Wolter Peeters

Finally, it was time to disconnect from gas for good and stop paying the service charge of about $30 a month, which consumers are billed for even if they don’t use any gas.

But when they contacted their gas retailer, Red Energy, they were stunned to discover the permanent removal of their gas meter would cost $1151.

“It’s such a disincentive to people wanting to get off gas – they’re trying to keep you on as a customer,” says Alexander, who lives in Holsworthy in south-west Sydney. “With higher gas prices the number of people switching to all-electric is going to increase, but it’s too expensive for a family to fork out $1100 to get rid of a service.”

Disconnecting from the gas network can be an expensive and confusing process. There are two different types of disconnection services.

The gas meter Anneliese Alexander wants removed from her home. Credit:Wolter Peeters

A temporary disconnection involves the local distributor capping the gas supply at the meter. This is typically less expensive, about $100.

And there is permanent disconnection – known universally as “gas abolishment” – which involves removing the meter, digging connection pipes out from the customer’s property and sealing the mains pipe, a process that uses more labour and equipment.

The cost for this varies wildly: The Age and The Sydney Morning Herald have talked to consumers who were quoted fees that ranged from $74 to $1151.

When Alexander contacted the gas provider she wasn’t told about the cheaper capping option, just the abolishment cost.

One couple in Castlemaine, in central Victoria, were told it would cost $958.10 plus a $33 service fee to abolish their gas. They were not informed of a cheaper option.

“We’re in a position where we can pay the fee, but I have a feeling that we’re being ripped off,” says one of the Castlemaine consumers, who wanted to remain anonymous.

What these charges might look like in the future is a live issue. The Australian Energy Regulator (AER) is responsible for setting these charges and is considering how they will be recovered in the future, including if they will continue to be charged to individual customers or spread across the whole network.

“Energy affordability and equity is important to the AER and it is currently in the process of considering … these charges and how they could be recovered in the future,” said an AER spokesperson.

Rob McLeod, a policy manager at sustainability organisation Renew, says there is a lack of clarity for consumers.

“Because gas networks will be entering into a death spiral in future years, there will be fewer and fewer people paying the retail costs that fund maintenance in the system,” McLeod said.

“There’s a real justice question about who should be made to pay when people disconnect. Will it be left to people with a gas connection? Should it be governments? Or should it be gas companies who are making huge profits?”

Most customers have faced double-digit price rises in their electricity and gas contracts this year, with increases of between 7 and 15 per cent for gas across distribution networks from June to September 2022. Big retailers including Origin, AGL and Alinta have also announced significant increases to residential and small business gas prices from the start of this month.

‘There’s a real justice question about who should be made to pay when people disconnect.’

The widespread use of domestic gas sits uneasily with the states’ commitment to net-zero carbon emissions. Victoria has pledged to reach this target by 2045, while the NSW and federal governments have both committed to net-zero by 2050. Victorians are the largest gas users in the country.

“Australians know moving away from gas is vital to achieving our emissions reduction and renewable energy targets,” said Sarah Rogan, a spokesperson for Environment Victoria said.

A spokesperson for the Victorian government said it was unacceptable some customers were being “overcharged” to shift away from gas and towards cheaper electric products.

“We look forward to the Australian Energy Regulator addressing barriers to electrification,” the spokesperson said. “If necessary, we won’t hesitate to take action to ensure gas suppliers are charging fair prices for their services.”

A spokesperson for Red Energy said the company only collects the disconnection or abolishment fee on behalf of the gas distributor network, and passes it on, and that it didn’t make any money on this transaction.

Energy Networks Australia, which represents gas distribution networks, was contacted for comment.

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