Gas customers face higher bills sooner as exodus grows

Households and businesses connected to gas could be slugged with higher prices sooner under rules designed to prevent a dwindling group being left to pay for networks.

The Australian Energy Market Commission released draft gas reforms on Thursday, outlining changes for providers, consumers and the regulator.

But one consumer group called some proposed reforms a "profound disappointment," and warned households could be disadvantaged and exposed to greater risk.

The announcement comes as thousands more consumers switch from gas to electricity, and months before new homes built in Victoria are required to be all-electric.

The proposed changes would ask service providers to create a 20-year gas outlook, consider investments against forecasts rather than current demand, and would allow some network costs to be recovered earlier while more customers used the network.

The changes could increase costs for gas customers in the short term, which commission chair Anna Collyer said would prevent larger sums being recovered from a smaller group in later years.

"Our draft package lays the foundations for an orderly, consumer-led transition that puts households and businesses in the driver's seat," she said.

"Despite uncertainty about future gas demand, government policies and transition timelines, we cannot afford to delay action — it will only allow the problem to grow, become more costly, and harder to resolve."

If the full cost recovery pushed gas prices too high, the draft said, the regulator would be allowed to write down the value of network assets.

The commission noted gas demand from households and small businesses on the east coast was expected to drop by 75 per cent over the next 20 years, and by 55 per cent on the west coast.

Restrictions on further gas investments would be welcome, Energy Consumers Australia chief executive Dr Brendan French said, but allowing providers to charge higher prices sooner could cause financial pain.

"Today's draft decision by the Australian Energy Market Commission is a profound disappointment and a step in the wrong direction," he said.

"It would deal another blow to households and small businesses already facing significant cost-of-living pressures."

The commission should retain more power to restrict gas bill rises, Dr French said, and protect vulnerable consumers who are not equipped to electrify their appliances or homes.