No easy answers to gas network 'death spiral'

Australians are embracing electrification in the name of decarbonisation, healthier homes and cheaper bills but the shift has policymakers under pressure to insulate a shrinking pool of gas users from price shock.
Ron Ben-David, a former regulator who holds a professorial fellowship with the Monash Business School, describes the flight from the gas network as a "death spiral".
Like a runaway train, once some households start leaving the gas network, the cost of running and maintaining it increases for those who remain, prompting even more to make the switch.
And so on, and so on.
While a win for electrification and cutting emissions, the death spiral has consequences, not least for renters and others who might struggle to get off gas.
Even middle-income households could be challenged to stump up the hefty sums needed to replace gas heaters, ovens and stoves as gas bills continue to rise.
Left unchecked, Dr Ben-David said the problem could undermine community support for the net-zero transition.
"If we lose consumer support, then we can kiss the transition away," he told AAP.
The stranded gas asset issue has not gone unnoticed, with governments, regulators and industry all looking for solutions
Consumer and welfare groups have also been active, with Energy Consumers Australia pushing for a rule change to force developers and new customers to pay the full cost of new connections up front to stop the problem becoming even bigger.
Dr Ben-David believes there are no easy solutions to what is ultimately a political decision.
The debate boils down to "who pays for what", with consumers, investors and taxpayers all in play.
The matter is complicated by the unusual nature of gas distribution regulation.
As natural monopolies, gas network companies are not allowed to set their prices.
Prices must be approved by the Australian Energy Regulator under what is often described as a "regulatory compact" that ensures investor funds are returned to them during the life of the assets.
Forcing investors to cop the risk asset of stranding, therefore, allegedly amounts to a broken compact, Dr Ben-David said, making network stranding more complicated than just writing off a dud investment.
For gas network companies, "accelerated depreciation" is the answer. That effectively means asking the regulator to account for the shortened life spans of their assets so they can push up customer prices in the near term to hasten the recovery of their investments.
Governments could also help absorb some of the shrinking customer base costs but state and federal budgets are already under strain and bailing out gas networks could be politically contentious.
Dr Ben-David has put forward another option.
Under his proposed model, electricity distribution networks would underwrite the shrinking gas network.
There's more to his thinking, but using income generated by electricity distribution companies - and their customers - to underwrite declining gas networks is a key element.
It's based on the rationale that electricity networks would continue to expand and have long life spans in a low-carbon economy.
While he concedes it is controversial to be adding to electricity prices to pay off gas networks, he argues the other options are just as unappealing.
He also put the call out for better ideas, and fast.
"The best time to solve a problem is before the problem takes off," he said.

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Israel-Iran war: Deputy PM Richard Marles confirms nearly 4000 Australians are seeking evacuation

West Australian

an hour ago

West Australian

Israel-Iran war: Deputy PM Richard Marles confirms nearly 4000 Australians are seeking evacuation

Deputy Prime Minister Minister Richard Marles says nearly 4000 Australians have sought evacuation support from the Israel-Iran conflict, as the Middle East war intensifies in the wake of US-led airstrikes on Iranian nuclear facilities. US President Donald Trump said on Sunday the US military had struck three sites in Iran, marking a direct entry into Israel's campaign to dismantle Tehran's nuclear program. Mr Marles on Sunday struggled to explain Australia's position on whether the government supports potential US strikes, instead continuing to urge 'de-escalation, dialogue and diplomacy'. 'The Iranian nuclear ballistic missile program is most definitely a threat to the peace and stability of not only the Middle East,' Mr Marles said. 'We have used our voice to urge de-escalation. And that's our position in respect of both the Iranian program, but also, more specifically, in respect of this conflict.' He said Australia had ramped up their support network in the region and were ready and willing to evacuate stranded citizens out of both nations with charter flights at the ready. However, he said a key obstacle to evacuation efforts was that Iranian airspace remained closed. 'The numbers of Australians, both in Iran and Israel, seeking assisted departures has grown,' he told Sky News on Sunday. 'This number is probably already out of date, but the last briefing is around 2600 Australians in Iran are seeking assisted departures, and around 1200 in Israel. Australia has deployed consular officials to Azerbaijan to assess how they can assist citizens trying to cross the border out of Iran. The government has also positioned civilian charter planes and military aircraft — a C-17 and a KC-30 capable of carrying hundreds — at the El Minhad base near Dubai, where its usual team of 40 personnel has been boosted to around 300 to support a range of scenarios. 'So, we really are poised to provide whatever assistance we can in the event that airspace opens up,' Mr Marles said. 'We have had a couple of groups leave Israel by land through Jordan. We're hoping to do a couple of more groups today.' Mr Marles said he has been in contact with the United States and that Australia would continue to maintain communication on the Middle East situation, though he declined to disclose further details. He also mentioned that the upcoming NATO meeting in the Netherlands he will attend instead of Prime Minister Anthony Alabnese will focus on strengthening strategic alliances and defense spending. Mr Marles said rearranged plans for a meeting between the PM and Mr Trump after they one-on-one was canned on the sideline of the G7 in Canada would occur in the 'not too distant future'. 'We continue at ministerial level and at official level to have pretty real constant contact with the United States, as you would expect,' he said. 'Our alliance with the US is the cornerstone of our strategic and foreign policy. 'We are managing all the equities associated with that relationship, and it is fundamentally going well.' Shadow energy minister Dan Tehan said the Albanese government has isolated itself from Israel and needs to show clearer moral resolve on wanting Iran to abandon its nuclear weapons program. 'One of the real problems with the way the government has pursued the current issues in the Middle East is they seem to have isolated themselves from the Israeli government,' Mr Tehan told Sky News. 'I think that has left them in a situation where they're really trying to walk two sides here. 'I think what we need to see from the government is greater moral clarity as to whether they do, once and for all, want to see Iran rid of its nuclear weapons program.'