Call her Denise. She is 71, lives alone in a 1970s brick-veneer house in Reservoir, in Melbourne's north, and for forty years has heated the place with a gas ducted system original to the build, run gas hot water off the same meter, and cooked on a gas stove her late husband installed himself. Denise is a composite — no single household stands in for the roughly four in five Victorian homes connected to reticulated gas, more than any other state in the country — but her arithmetic is real: a gas bill that has climbed by more than a third in under two years, a ducted heater old enough that its next repair is likely to be its last, and a state government that has told her, gently but unambiguously, that when it goes it will not be replaced with another one. Had she been renting, her landlord would face a legal requirement from 1 March 2027 to replace any failed gas heater or hot water system with an electric one; she owns her home, so for now the choice is still hers. Her government's bet is that switching first costs less than staying on gas long enough to find out what the alternative costs.
What the government did
Victoria's exit from gas began as a climate policy and became a supply policy. The Andrews government released the first Gas Substitution Roadmap in July 2022, setting a state ambition to cut gas use as part of the legislated path to net zero emissions by 2045, which includes an interim target of cutting emissions 75-80% below 2005 levels by 2035 — among the most aggressive of any Australian jurisdiction (Department of Energy, Environment and Climate Action (DEECA), Victoria's Gas Substitution Roadmap, Jul-2022; Climate Change Act 2017 (Vic), as amended). At the time, 80% of Victorian homes were connected to gas, the highest share of any state or territory, a legacy of cheap Bass Strait gas piped to Melbourne since the 1970s (DEECA, Victoria's Gas Substitution Roadmap, Jul-2022).
The Roadmap became binding law on 1 January 2024, when Amendment VC250 to the Victoria Planning Provisions was gazetted, inserting a new clause 53.03 into every planning scheme in the state. From that date, no planning permit for a new dwelling, apartment development or residential subdivision may allow a connection to reticulated natural gas, and any permit issued must carry a condition preventing one being added later (Department of Transport and Planning, Amendment VC250 to the Victoria Planning Provisions, gazetted 1-Jan-2024). The same start date applied to the government's own construction: all new government buildings, including schools and hospitals, are now required to be built all-electric (Premier of Victoria, Gas Substitution Roadmap Charts Path to Lower Bills, media release, 20-Dec-2023).
A year-end update in December 2023 extended the policy beyond new construction. From 1 March 2027, roughly 500,000 rented homes across Victoria become subject to new minimum energy efficiency standards, including a ban on replacing a failed gas heater or hot water system with another gas unit — the replacement must be an efficient electric alternative, typically a reverse-cycle air conditioner or heat-pump hot water system (DEECA, Victoria's Gas Substitution Roadmap Update, Dec-2023). Alongside the mandates sits a subsidy program: Solar Victoria's Solar Homes scheme offers rebates of up to $1,400 for rooftop solar and up to $1,400 for efficient hot water systems, interest-free loans of up to $8,800 for household batteries, and a separate $10 million Residential Electrification Grants program pays volume builders and developers to bundle solar, hot water and heat-pump upgrades into new homes at the point of sale (Solar Victoria, Solar Homes Program and Residential Electrification Grants, program guidelines, 2024-2025). From April 2024, gas distribution businesses have also been banned from offering financial inducements — cash-backs, discounted appliances — to connect new customers to gas or buy gas appliances (DEECA, Victoria's Gas Substitution Roadmap Update, Dec-2023).
The strongest case
Gas is getting more expensive, less reliable and harder to justify building into a home that will stand for sixty years
On the government's own figures, an existing all-electric Victorian home with rooftop solar spends up to $2,700 a year less on energy than one still running on gas, or roughly $1,700 a year less without solar, while removing the fixed daily gas supply charge alone saves close to $400 a year the moment the meter is disconnected (Premier of Victoria, Gas Substitution Roadmap Charts Path to Lower Bills, media release, 20-Dec-2023). That case has strengthened while the policy has rolled out: Victorian residential gas prices rose by more than $500, or roughly 35%, in the two years before the Roadmap update, and AEMO's own supply forecasts show why that is unlikely to reverse — Victoria's Gippsland and Port Campbell gas fields, the source of most of the state's gas since the 1970s, are in structural decline, with the gap between what Victoria can produce and what it needs forecast to reach 40 petajoules by 2030 and 115 petajoules by 2035 (AEMO, 2026 Victorian Gas Planning Report Update, Mar-2026). A new home built today with a gas connection is a bet against a resource the market operator itself expects to keep getting scarcer. Banning that connection at the point of construction — before a slab is poured, a pipe is trenched or a buyer has signed a 25-year mortgage — is also the cheapest possible moment to make the switch, since retrofitting an established home with new wiring, appliances and possibly a switchboard upgrade costs far more than specifying it once at the build stage. On this reading, the government is not gambling with household budgets; it is getting ahead of a supply problem the data already shows is coming, at the one point in a home's life when the change is nearly free.
The evidence
The clearest evidence for the government's own economic case sits in the gap between what Victorians are paying for gas today and what the regulator expects them to pay for electricity tomorrow. The Essential Services Commission's Victorian Default Offer — the regulated benchmark price the state's electricity retailers must not exceed for standing-offer customers — is set to fall for the first time in years: the ESC's 2026-27 final decision cuts the average residential default offer by 5%, driven by lower wholesale, network and environmental costs, after a 1% rise the year before (Essential Services Commission, Victorian Default Offer price review 2026-27, final decision; Victorian Default Offer 2025-26 Final Decision Paper, 21-May-2025). Gas has moved the other way for years, and AEMO's supply modelling is the reason it is expected to keep doing so.
AEMO's most recent Victorian Gas Planning Report Update, released March 2026, forecasts that Victoria's own gas fields will fall further behind the state's demand every year across the outlook period, even as demand itself declines because of electrification. System demand on a typical (1-in-2 year) day is forecast to fall 12.8%, from 958 terajoules a day in 2026 to 836 terajoules a day in 2030 — evidence the substitution policy is measurably reducing gas use — but production is falling faster than demand, and the resulting shortfall, currently manageable, is forecast to reach 40 petajoules by 2030 and 115 petajoules by 2035 without new supply investment (AEMO, 2026 Victorian Gas Planning Report Update, Mar-2026). AEMO's companion 2026 Gas Statement of Opportunities separately flags a peak-day shortfall risk across the southern states as early as 2029, and a structural supply gap from 2030 under most weather conditions (AEMO, 2026 Gas Statement of Opportunities, Mar-2026).
Read together, the AEMO figures make the government's underlying logic legible: the Roadmap is not just riding on top of a healthy gas system, it is a demand-management response to a supply system AEMO already expects to fall short. Every household that switches is, in AEMO's own accounting, one less claim on a shrinking resource — the government's most defensible answer to why it moved on new homes first, before the harder and costlier task of the millions of established homes still connected.
The cost of the switch
The government's savings case rests on a household actually making the switch, and switching is not free even with the subsidies on offer. A heat-pump hot water system, the standard replacement mandated for end-of-life gas units, costs an estimated $3,800 to $5,200 fully installed before any rebate is applied (approx., installer market pricing, 2025-26). Stacking Solar Victoria's hot water rebate, a Victorian Energy Upgrades certificate discount and the federal Small-scale Technology Certificate scheme typically brings the out-of-pocket cost down to between $1,500 and $2,500 (approx., combined program values, 2025-26) — real relief, but still a four-figure outlay for a household whose gas system has simply failed and needs replacing now, not on a timetable of its choosing. For an owner-occupier on a fixed income, like the composite Denise described above, that is less a bill-saving decision than a forced, unbudgeted expense with a payback period measured in years.
Renters face the same problem one step removed. From 1 March 2027, a landlord whose rental property's gas heater or hot water system fails must replace it with an electric unit — the tenant benefits from lower bills, but only if the landlord complies, and only after the capital cost is met by someone else on someone else's schedule. The government's own Roadmap papers acknowledge the rental sector, roughly 500,000 homes, is the hardest segment to shift precisely because the party paying — the landlord — is not the party saving, the tenant (DEECA, Victoria's Gas Substitution Roadmap Update, Dec-2023) — a split-incentive problem the mandate addresses by compulsion rather than by resolving who bears the cost.
Banning the next gas connection is nearly free; replacing the last one is not — and the households with the least capacity to absorb an unplanned four-figure bill are the ones most likely to be holding it.
The choice question
Victoria has stopped short of an outright ban on gas in existing owner-occupied homes — Denise can still relight her ducted heater every winter for as long as it keeps working, and nothing in state law forces her to switch before then. But the policy narrows that choice from the edges rather than removing it outright, and the mechanism doing the narrowing is price as much as law. Grattan Institute modelling, drawing on Australian Energy Regulator network cost data, finds that as households leave the gas network, the fixed cost of maintaining pipes, meters and distribution infrastructure is spread across a shrinking pool of remaining customers — a dynamic the industry calls a "death spiral", under which the AER's own forecasts suggest gas bills could double by 2035 and rise by as much as 600% by 2050 if the transition is not actively managed (Grattan Institute, Out of Gas: Managing the Decline of Gas in Australia, 2024 — a clearly-labelled secondary analysis of AER data). For a household that cannot afford to switch — an age pensioner, a family already stretched — the "choice" to stay on gas increasingly means paying a rising share of a shrinking network's fixed costs on top of a rising commodity price, for as long as it holds out.
Underneath that household-level choice sits a larger one the government has not resolved: what happens to the network itself as customers leave it. A Victorian parliamentary inquiry into decommissioning oil and gas infrastructure, established by the Legislative Council's Environment and Planning Committee in August 2024 and due to report by June 2026, is examining roughly 400 offshore wells and more than 23,000 kilometres of onshore pipeline against a national decommissioning cost estimated at $60 billion, with submissions warning liability could fall to Victorian taxpayers if the companies that built the network do not fully fund its retirement (Parliament of Victoria, Legislative Council Environment and Planning Committee, Inquiry into Decommissioning Oil and Gas Infrastructure, established 28-Aug-2024, reporting due Jun-2026). Retiring a network the government is actively encouraging households to leave, without a settled answer on who pays to make it safe, is a bill not yet presented to anyone.
The risk to the future
The state's own auditor doubts the transition is on track, in the same window the gas shortfall starts to bite
The Victorian Auditor-General's Office delivered its own verdict in December 2025, in Managing the Transition to Renewable Energy, and it complicates the government's timeline on both fuels at once. VAGO found Victoria is on track to meet its interim renewable generation targets but will likely struggle to reach the legislated 65% renewable electricity target for 2030, even with Commonwealth support through the Capacity Investment Scheme, and separately warned that gas shortages are expected to emerge from 2026, with the risk compounding if drought conditions constrain the hydro-electric generation the state also leans on (Victorian Auditor-General's Office, Managing the Transition to Renewable Energy, Dec-2025). That warning lands in the same years the Yallourn coal power station closes, in 2028, ahead of Loy Yang A in 2035 — Victoria is scheduled to lose its two largest remaining coal generators in roughly the window AEMO expects the gas system replacing them to fall increasingly short (same VAGO report; AEMO, 2026 Victorian Gas Planning Report Update, Mar-2026). Electrification is meant to cut Victoria's exposure to a declining gas system by moving demand onto the grid — but if the renewable build is behind schedule, that demand lands on an electricity system not yet proven ready for it, just as the gas backup it replaces also grows less reliable. The risk is not that Victoria chose the wrong direction; it is that building enough clean generation and retiring enough gas are not moving at matching speed, and neither the auditor nor the market operator will guarantee they meet in the middle on schedule.