New Zealand’s gas industry under pressure
Changes to the gas industry could see it evaporating in coming years.
Changes to the gas industry could see it evaporating in coming years.
Gas users could be paying an extra $220 over the next four years, due to proposed changes from The Commerce Commission.
Last Thursday, a draft for upcoming price and quality control changes to gas networks was released. This comes as the government strives for 100 percent renewable energy by 2050.
There are around 300,000 active gas connections, all in the North Island. The majority of which are residential consumers. With many sharing a connection under the same roof, a large number of individuals will be affected by these changes.
Many users favour piped gas for the price, its reliability to heat homes, and ensure a constant supply of hot water at their fingertips.
However, natural gas is just a nicer name for fossil fuel. Yes, those dreaded words. With their planet-warming greenhouse gas emissions contributing to the world's ever growing climate crisis.
These changes are a positive step for the future of New Zealand, though it leaves many gas users in the lurch.
If you’re weighing up a new connection, think twice. But if you already have a connection you don’t need to go ripping it out just yet.
The Commission wants gas pipeline businesses to continue delivering a safe and reliable supply to consumers over the short-term until the future of gas use in New Zealand becomes clear.
Commerce Commission Associate Commissioner Vhari McWha said they want to avoid the potential for a sharp increase in existing customers' bills as demand for natural gas is expected to reduce over time.
The Commission is set to determine price and quality factors that apply to New Zealand’s four gas pipeline businesses by the end of May 2022. The decision will take effect from 1 October 2022 and will remain until 30 September 2026.
You will still be able to get gas for, at least, the next four years - though it will be more expensive.
After that, the future of gas looks uncertain, though the Commission will be looking into whether pipelines can be repurposed for low or no carbon gas alternatives like hydrogen to replace natural gas.
With the expected decline in gas use, the Commission is proposing increasing the price of gas for existing users to ensure gas networks have enough revenue to continue providing their usual services.
McWha said the impact of this on household gas bills would be an increase of about 4.5 percent in each year of the regulatory period.
For a typical annual household gas bill of about $1,275, this would be an increase of around $55 per year.
“We have considered the impact on consumers in determining how much revenue should be brought forward and balanced this against the need for businesses to invest in the networks to continue to provide the services at a level that consumers demand,” McWha said.
“We recognise that this will have an impact on some of New Zealand’s most vulnerable users of natural piped gas and have limited the size of the increase with that in mind.”
The Commission hopes to have a clearer view of the long-term future of natural gas in four years’ time. For now, the future of gas use in New Zealand remains unclear.
The upcoming changes are currently in their draft proposal stage. The Commerce Commission is seeking feedback to be submitted for consideration by the 10th March 2022.
Consumer is completely captured by extremists with a myopic world view.
There is no good reason for a country of a few million people to cease using gas for domestic use.
Of course, those who work at Consumer are all very well-off financially and think nothing of splashing $30K on a large solar array and a Tesla Powerwall.
There's a term for peole like this: champagne socialists. I can smell the smugness from here.
We replaced our low pressure hot water tank with a gas instant hot water system, and picked the greenest option. I would be loathe to swap back to electricity. Our house is unsuitable for solar fit-out, so all our energy would be electric. Where does the government think the extra electricity generation is going to come from? People shower when it's dark and also use heating when it's dark (no solar available). Wind and tide options don't deliver guaranteed supply.
If the government is seriously concerned about fossil fuel use, then push to get a lot of trucks off the road and invest in rail. That will do more to help NZ's fossil fuel use than to penalise people with gas connections.
We moved from northland to taranaki 3 months ago..the property we bought has a cooktop on bottled gas and gas hotwater. The power bill is 70 to 80 dollars less per month and that is during the summer months...we would be very reluctant to change to electric hobtop and hot water cylinder
The New Zealand government appears to be quite consistent in its approach to getting us to do stuff, and most of the time uses a boot. It would be good if they took the approach that the UK has and give out subsisdes with the boot to encourage us to switch from Gas to Electricity. We have solar, and the main use is to power the car. Our heating, hot water and hob are all gas, and to switch just the ducted gas heating to a heat pump would cost in excess of $16,000 and would require replacing all of the ducting. We haven't yet looked at changing over the water heater, but imagine that will be thousands too. The UK government are handing out the equivalent of $10,000 grants to switch, and that would go a long way to funding us to switch from gas to electric.
Information on insulation subsidies here... https://www.eeca.govt.nz/co-funding/insulation-and-heater-grants/warmer-kiwi-homes-programme/
UNFORTUNATELY OUR GOVT HAS IT'S HEAD IN THE SAND AS FAR AS ENERGY IS CONCERNED. NZ MAKES UP .2% OF GLOBAL POLUTION. THE ONLY REASON FOR THE EXISTANCE OF THE GREEN PARTY IS TO DISTRIBUTE PROPAGANDA AND CONVINCE PEOPLE WITH LOW IQ,s OF THE DOOM AND GLOOM OF PENDING DISASTERS.
PUTTING UP THE COST ON ALL FORMS OF FUEL ONLY RAISES THE TAXES AND INCREASES INFLATION AND POVERTY BUT THE GOVT IS HELL BENT ON DESTROYING THE NZ ECONOMY.
All caps use in txt is screaming, no need for that. No government ever wants to destroy the economy, so your argument is based on unsubstantiated emotional thinking. Global warming caused by fossil fuel burning is a proven reality. Chris Verburg
It's happening now and it's just going to get worse. If everybody just stands by and says, let someone else make the changes, then we are doomed. If the Government were hell bent on wrecking the economy then it has failed spectaculary, with record employment, etc in the face of a global pandemic, global supply chain disruption and global inflation. Accusing the Greens of existing for propaganda is a bit rich when you're just spreading National Party talking points. This isn't the forum to do that.
While gas is still being used to produced electricity it seems more efficient to use gas in my house for cooking, water heating and space heating. The loss of the energy in gas when it is used to produce electricity and also in the transmission power lines means it doesn't make sense for me to convert to all electric. If electricity was 100% renewable I would be more inclined to shift, but currently in-house use of gas seems better for the environment.
To reduce our footprint and to avoid the excessive $50 per month fixed minimum charge, we changed our water heating, some house heating and stove top from reticulated gas to solar/grid electricity and bottled gas. When we purchased a second hand electric car our costs and carbon use significantly reduced even more. After 1 year we have paid half for our electricity, $40 in total for our bottled gas, and travelled 13,000 km with zero emissions and practically zero cost cf petrol. Saving at least $50 per week as well as the emission reductions.
Of course there are setup costs but all those that can afford a new car, at $35,000, could afford to do what we did. They would not only reduce their footprint but they would significantly recoup their costs, which a new car purchase would certainly not allow them to do!
We got solar last september, the main purpose was to charge the car, but switching our ducted heating $16,000, hot water $$$$ and hob $$ to electricity mean going completely electric firstly doens't make financial sense, and secondly is really expensive. The goverment needs to give grants to switch, rather than taxing us.
I forgot to mention the $18,000 needed for the solar battery so that you can use electric heating from solar when the sun isn't shining. So we'd be looking at around $41,000 to completely move away from gas.
I'd like to see more discussion on alternatives (electricity, solar, stored solar heated hot water etc) If mains electricity is to be the solution then there needs to be a meaningful discussion of cost, evironmental and aesthetic as well as $, of power generation. Every source of energy has its downsides and these issues need to be debated earlier in the process.
We use bottled gas for our hob. It’s very quick and responsive, cf electricity.
What concerns me more is that Chinese dirty coal is being imported and used. If coal must be used (and it appears necessary, just now) why not use cleaner coal from the many mines on the West Coast? Not only is Chinese coal dirty coal, but Chinese coal wastes even more resources by needing to be freighted a long way.
Induction stoves are just as responsive as gas, I’ll certainly will replace my gas (bottle) stove for an induction stove soon.
Willie &Chris V. I've used induction hobs and they don't compare in any way to the responsive ness and heat of gas, and you may need to buy a whole new set of pots to use them.
It is misleading to label natural gas a 'dreaded fossil fuel'
Methane C H4 is more like hydrogen. It burns to produce 2 molecules of water and one of Carbon dioxide. If we replace all our diesel and coal use with Natural gas we wont have a carbon emissions problem. This is happening a lot in the North of our planet.
In England you are not allowed to install gas heating in new builds, so they are changing all this for no reason?
Willie &Chris V. In the UK you get the equivalent of $10,000 to switch, here in NZ we just get a kick up the arse by the government.
and I am amazed people can't see this. The Greens have essentially blocked further power stations so we are in a sort of dreamland happily converting to electricity when those of us who can remember power cuts look on with alarm. Governments of the 1960s learnt quickly that sudden loss of electricity at 5pm infuriated voters and that situation still holds true. EV charging or cooking a meal, you choose.
A combination of wind, solar, hydro (including recycled) and geothermal mean that electricity is definitely not a finite resource. Burning fossil fuels ( gas, coal) not only contributes to global warming but uses extractive resources that are finite. Plus the development of technologies that mean that energy use is more efficient (insulation, re-use of waste heat etc) will mean that we can wean ourselves off the burning of fossil fuels.
Gas may be a fossil fuel but it is much cleaner than coal. It should have a large role for a least the next 20 years. Phase out of carbon should be concentrated on coal plants and in the transport industry via congestion charging rather than households with a gas appliance that will be good for another 20+ year
Gas is a fossil fuel, the burning of which is destroying the planet. In New Zealand, with 80% renewable energy, it's a no-brainer to move away from gas to electric. We purchased our first home last year, which has gas hot water, and are beginning the process to electrify our hot water.
For existing customers it isn't a no brainer. $16,000 for a new heat pump, several thousand for a new stove and several thousand for a water tank, and then the increase in power bills that go with it.
With the recent break in electricity supply in the Waikato I am not convinced that relying on one form of power, if you have a choice, is a good idea. I also think that the demise of gas is premature. It is needed to transition to green alternatives. I believe we are in danger of getting power supply seriously wrong and I think we are likely to have less security of supply in the future. Something that is worrying Australians now with the early closing of their largest coal fired power plant at Eraring. Not too much to worry about here in New Zealand though?
Australia has some of the worst energy use records in the world. And their all powerful coal industry is trying to keep it that way, please don’t use them as an example. By the way they are the only country in the world that taxes EVs.
Willie &Chris V. South Australia has some of the cheapest wholesale electricity prices in the country, even as it reaches “world first” levels of 100 per cent solar power. They reported 100% renewable for an hour around mid october just from rooftop solar and utility scale solar. They have subsidies, we don't
We are building and the gas option compared to the full electric heat pump option after fit out costs was less expensive. With uncertainty on future of gas it was a no brainer for us.
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