Rule Change: Open
Overview
The Australian Energy Market Commission (AEMC) has published its draft determination and draft rule to update the regulatory framework for gas connections.
The draft rule would require newly connecting retail gas customers to pay the cost-reflective charge upfront for their connection.
We have made a more preferable draft rule to change the connection charge criteria
Our more preferable draft rule would require distributors to charge newly connecting retail customers for their connection upfront and for the charges to be cost reflective. To do this the draft rule would:
- Amend the connection charge criteria under Rule 119M of the national gas rules (NGR) to remove the net present value test and replace it with a new criteria for distributors to determine cost reflective pricing
- Maintain the existing application of the connection charge requirements in Part 12A of the NGR. This means the draft rule would apply to retail customers on scheme and nominated non-scheme pipelines in jurisdictions subject to the National Energy Customer Framework for gas (NSW, the ACT, South Australia and Queensland)
- Require distributors to update their model standing offers for connections to reflect the amended criteria.
The draft rule promotes the national gas objective and provides for improved outcomes for gas customers by:
- ensuring the demand and asset stranding risks associated with new connections sit with the party best able to manage them (i.e. the connecting customer)
- preventing connection costs from being added to the capital base to limit asset stranding risk and customers from paying more depreciation
- mitigating significant cost impacts for remaining gas customers, and
- providing a cost-reflective price signal to connecting parties to facilitate more efficient (and potentially lower emissions) connection and energy choice decisions.
To provide sufficient time for distributors to implement changes to connection charges for all newly connecting customers, the draft rule has a commencement date of 1 July 2026. Any retail customer gas connection applications made after 1 July 2026 would be subject to the new framework.
The draft rule also includes transitional arrangements to allow for the implementation of the amended gas connection charge framework in upcoming access arrangement decisions.
We are interested in your views on the issues raised in the draft determination. Stakeholder submissions are due by 30 October 2025.
Background
On 14 February 2025, the AEMC received a rule change request from ECA to amend the National Gas Rules and the National Energy Retail Rules. The rule change request proposes to amend the NGR to require gas network distributors to charge customers the full upfront cost of new connections.
This rule change request is one of four rule change requests submitted by ECA that seek to address the impacts of declining demand on gas distribution networks.
On 12 June 2025, the AEMC initiated joint consultation on ECA’s rule change request and the Justice and Equity Centre’s (JEC) rule change request on gas disconnections and abolishments. We received 27 submissions, which can be found below.
Following initial consultation, the AEMC will progress ECA and the JEC’s rule changes separately.