Victorian Gas Distributor Campaigns Risk Consumer Harm and Legal Action

Victoria's gas distribution networks are running promotional campaigns asserting a long-term renewable gas future for households, despite their own regulator submissions showing minimal investment in hydrogen and substantial provisions for asset stranding under electrification. IEEFA's analysis finds the campaigns could constitute misleading conduct under Australian consumer law and result in material financial losses for both consumers and network businesses.

The networks have requested recovery of an additional A$461 million in accelerated depreciation from consumers over the next five years, of which the Australian Energy Regulator approved A$333 million — approximately 7% of their total asset base. This accelerated depreciation request reflects the networks' own expectations of declining demand as customers disconnect in favour of electricity. Separately, the same networks are spending A$6 million on renewable gas promotional campaigns. The argument for renewable gas via biomethane or hydrogen as a household fuel contradicts the regulatory evidence and the networks' investment behaviour.

Electrification of household energy is the dominant policy direction in Australia and the cheapest decarbonisation pathway for homes. Hydrogen faces significant technical constraints as a residential fuel: appliances would need to be replaced, and distribution networks would require major and costly upgrades. The networks' campaigns have not clearly disclosed the low probability of renewable gas serving as a mainstream household fuel. The Australian Consumer and Competition Commission has previously warned businesses against misleading conduct, and IEEFA identifies a risk that the networks' promotional activities could trigger regulatory investigation.

Consumer investments in gas appliances — which, in aggregate, likely number in the billions of dollars — could become stranded if a renewable gas future does not materialise. Affected consumers may seek legal recourse against the network businesses. IEEFA recommends that investors assess these liability risks carefully when allocating capital to Victorian gas distribution assets. Governments and regulators should act to ensure promotional campaigns are lawful under Australian consumer law and that expenditure on renewable gas activities is not approved where it conflicts with consumers' long-term interests.

Key figure — A$333 million — accelerated depreciation approved by the Australian Energy Regulator for Victorian gas networks, equal to nearly 7% of their total asset base.