For decades, the regulation of Australia's gas pipelines has been based on a growing number of users splitting the costs. But that system is coming under pressure, as more Australians leave the network in favour of going electric. The Australian Energy Market Operator (AEMO) forecasts the number of household and business customers connected to gas networks is set to fall from almost 5 million now, to barely 4 million by 2030. AEMO says this number will collapse to as few as 1.5 million by the middle of the 2040s. Experts says a precipitous decline in gas connections will completely break the model used to regulate the networks. Under that model, gas pipeline owners are able to recover the huge cost of buying or building their networks — plus a profit margin — by charging a "fair" price to everyone connected to the network. How those prices are set, and the way they are apportioned to consumers, is determined by regulators. It's always been based on the notion there would be more customers joining the network. New customers don't pay the full cost of a connection, as it's subsidised by existing users. But with more Australians getting off gas, that could change with the Australian Energy Regulator (AER) now assessing the options.
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