Victorian Households Can Save $1,200 Annually by Switching Gas Appliances to Electric

IEEFA analysis finds that transitioning residential gas appliances to electric alternatives at end of life from 2025 is the most cost-effective strategy for Victoria to address looming gas supply shortfalls and meet emissions reduction targets. The average Victorian household stands to save $1,200 per year on energy bills by going fully electric.

Victoria accounts for 63% of Australia's total household gas consumption, built on decades of reliance on cheap Bass Strait gas. Those reserves are depleting rapidly, and the state faces potential gas supply shortfalls within four years. IEEFA modelling shows that switching gas appliances to efficient electric alternatives at end of life from 2025 would significantly reduce annual gas supply shortfalls and align residential emissions very closely to Victoria's economy-wide targets. For every year gas appliances are converted to electric rather than replaced with gas alternatives, consumers collectively avoid $912 million in locked-in costs.

The transition presents challenges for gas distribution networks, which could face $3.5 billion in unrecovered costs if a 2.5% per annum cap is applied to gas distribution price increases through to 2050. IEEFA argues this is outweighed by approximately $17 billion in consumer savings over the same period. Gas distribution networks in Victoria have earned extraordinarily high rates of return over the past decade, weakening the case for government compensation. The Australian Energy Regulator has both the power and remit to limit price increases passed on to consumers and is not required to ensure full network cost recovery.

IEEFA identifies a risk of a gas death spiral if the transition is unmanaged — where households leaving the network leave rising costs concentrated among those least able to electrify, typically renters and low-income households. The Victorian government's State Electricity Commission one-stop shop for home electrification is a step toward a managed transition. IEEFA recommends that planning for both household electrification support and the wind-down of gas distribution networks begin immediately, given that the costs of delay compound for each year Victorians continue investing in gas appliances.

Key figure — $1,200 — estimated annual energy bill saving for the average Victorian household switching to all-electric appliances