New code of practice for gas distributors to apply from 1 October 2024

The Essential Services Commission has released its final decision on the Gas Distribution Code of Practice. The new code will take effect on 1 October 2024 and provides a fair and clear framework for gas network customers as Victoria transitions to net-zero emissions.

The new code will:

• Enable the commission to use its enforcement powers to effectively monitor and enforce the rules on gas distributors, including through civil penalty provisions.
• Require gas distributors to provide clear information to customers on their websites, including how customers can disconnect or abolish their gas connections. 
• Remove duplication with other regulations to streamline the regulatory framework.

Importantly, the new code also removes inefficient incentives for new gas connections. From 1 January 2025, customers who may seek to establish a new gas connection will pay up-front installation costs for new gas connections, consistent with the current practice for new electricity and water connections.

The change will affect gas connections for residential customers and developers who fall outside Victoria’s Gas Substitution Roadmap ban on new gas connections, which has prohibited new gas connections in new planning permit applications for the construction of a new dwelling, apartment or residential subdivision since 1 January 2024.  

It will also affect a small number of commercial customers who are moving to or building in areas that are currently not served by the gas network. There is no change for industrial or larger commercial customers, who already pay upfront costs to establish a new gas connection. 

Essential Services Commission Chairperson and Commissioner Kate Symons says the new code will lead to a fairer and more efficient system for customers, and better outcomes for Victoria. 

“Under the existing system, the cost of new connections is shared across the whole network, so existing customers subsidise the cost of new connections. The user-pays system in the new code will shift the financial burden for new connections away from the network as a whole. New customers will pay upfront contributions for gas connections, in line with the existing practice for new electricity and water connections.” 

“This will support Victoria’s energy transition to net zero emissions and incentivise customers to choose more efficient and cheaper-to-run electrical appliances during the transition from fossil gas to electricity,” Commissioner Symons said. 

The final decision follows more than 12 months of engagement with stakeholders. The new code was developed with extensive input from gas distributors, retailers, customers, peak industry bodies, consumer protection groups and climate action groups. Most stakeholders expressed strong interest and support for the new code.

The new Gas Distribution Code of Practice is part of the commission’s ongoing work of remaking existing codes into codes of practice. The new code will streamline gas distribution regulation, remove duplication and improve alignment with the national regulatory framework. 

The Gas Distribution Code of Practice: Final decision is available on the commission’s website. The final decision includes the new Gas Distribution Code of Practice, a comparison between the previous code and the new code, and updates to gas distribution licences.