The Australian Energy Regulator (AER) has today released the final decision on Australian Gas Networks’ (AGN) gas access arrangement for the 2026–31 period.
Distribution gas networks are required to submit access arrangement proposals outlining the services they will provide, the tariffs for those services, and other terms and conditions on which the services will be provided to their customers over the next 5 years.
The decision balances the need for continued investment in safe and reliable services during the transition, while limiting unnecessary price increases.
The final decision for AGN allows for $1,370.3 million ($nominal, smoothed) in total revenue to be recovered from consumers over the 2026-31 period. This total revenue is $16.5 million (1.2%) lower than AGN’s revised proposal ($nominal).
This is a decrease of $65.8 million ($2025-26, 4.9%) compared to the current period (after accounting for the impact of inflation) and is largely driven by a lower regulatory depreciation amount and reduced forecast capital expenditure.
Demand is forecast to decline faster than revenue over the 2026-31 period, resulting in AGN's tariffs increasing by an average of 3.9% ($nominal) each year.
We estimate this will result in the distribution component of an average annual gas bill increasing by $26 for residential customers and $266 for small business customers ($nominal).
The final decision recognises that future demand for gas in South Australia is uncertain. While demand is forecast to fall, there are still potential future options for renewable gas in the state’s future.
“Ensuring consumers pay no more than necessary for safe, reliable and secure supply is important when faced with the uncertainty of a future network.
“We’ve approved revenue so Australian Gas Networks can invest in its network for those still using gas, while limiting the cost to these consumers,” said AER Board Member Lynne Gallagher.
The decision also provides for accelerated depreciation – that is, when costs are brought forward to be shared by customers currently on the gas network rather than the smaller future customer base – approving $29 million in accelerated depreciation to deliver efficient investment in its network. This is lower than the $70 million in AGN’s revised proposal.
The AER’s decision recognises that the economic lives of parts of AGN’s network are likely to be shortened by South Australian policies affecting the future of its gas distribution system.
“Some accelerated depreciation is appropriate to support efficient investment and maintain safe and reliable gas services.
“At the same time, uncertainty about declining demand, cost recovery and future prices means caution is needed in considering additional accelerated depreciation. Retaining flexibility allows us to reassess the role of accelerated depreciation during the transition,” said Ms Gallagher.
Forecast capital expenditure has decreased by $239.8 (-41.9%) compared with the current period, including a reduction in the cost of customer connections to the network following the Australian Energy Market Commission’s rule change which will require customers to pay this upfront cost from 1 October 2026.
Today’s decision will come into effect from 1 July 2026.