What’s cheaper: Electricity or gas?

But what is cheaper, and which one is better for you to use? Find out if electricity or gas is cheaper in this Canstar Blue guide.

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Electricity Vs. Gas Compared

Households have two options when it comes to powering their homes – gas and electricity. Electricity is the more common option, with virtually every home connected to the energy grid, while not every home will come with a gas connection.

In addition to any potential connection and installation fees involved, you’ll also have to consider the costs of buying new appliances, in addition to the traditional running costs that you’ll have to continuously fork out for. We’ll explore the breakdown of costs for both electricity and gas below.

Read more: Electricity & Gas Providers

Electricity Running Costs

Electricity customers are charged per kilowatt-hour (kWh) of electricity consumed, with households also needing to pay a ‘daily supply charge’ to cover the distributor’s cost of transporting the electricity to your home, which typically costs between 75c and $1.30 per day, depending on your location and the tariff type. The rates you pay for electricity will depend on your state and distribution network, with the typical electricity usage rates for each state as follows:

• Queensland: 20c/kWh
• Victoria: 20c/kWh
• New South Wales: 23c/kWh
• Tasmania: 24c/kWh
• South Australia: 32c/kWh

Keep in mind that the usage rates listed are relatively standard for a ‘single-rate’ tariff and those customers on time-of-use or block tariffs may be charged notably different rates.

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Natural Gas Running Costs

Natural gas customers are charged per megajoule (MJ) of natural gas consumed, alongside the fixed ‘daily supply charge’, which generally costs between 22 and 85 cents per day depending on your location and distribution network. Typical gas usage rates are:

• Victoria: 2.5c/MJ
• New South Wales: 3c/MJ
• South Australia: 4c/MJ
• Tasmania: 4.19c/MJ
• Western Australia: 4.26c/MJ
• Queensland: 5c/MJ

The above rates assume a single rate tariff, however, it is common for gas tariffs to operate on a ‘block-rate’ basis whereby the rate decreases incrementally as you use more gas.

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Electricity Vs. Gas Cost Comparison

From an initial glance, gas may seem cheaper than electricity to run, but it’s not as clear cut as that, as a kilowatt is a bigger unit than a megajoule, meaning the final running costs are slightly different. To help break it down, we’ve created the below table to explore the running costs of common household appliances, with the assumption of a 25c/kWh electricity usage rate and 4c/MJ gas usage rate.

*Assumes 260L gas/electric hot water storage system heating from 20°-70°. Note that electricity customers may also have access to a lower controlled load tariff.

As we can see, gas running costs are slightly cheaper to run than their electric counterparts, which can save you a noticeable amount over time, particularly if you’re using the appliances every day. However, keep in mind that these prices are based on particular assumptions that may not apply to your situation, meaning you’ll have to look into the finer details of your location and provider to fully ascertain how much – if any – you’d save working with gas or electricity.

Electricity Vs. Gas Appliance Purchasing Costs

While gas appliances are slightly cheaper to run, they also generally come with a higher price tag, which can outweigh the potential long-term savings. For example, a brand-new electric oven can cost as little as $450, whereas an entry-level gas oven will cost you closer to $1,100, meaning the initial cost may cause some hesitancy from some. However, appliance prices are dependent on retailers, the brand and which models you’re looking to purchase.

If you’re an avid cook, or you like to blast the heater, then it may work out cheaper overall to install gas appliances, provided you already have a natural gas connection. If you aren’t connected to the gas main, you’ll incur an additional fee, and have to pay two daily supply charges if you have an electricity and natural gas connection, meaning the cheaper gas running costs may be quickly negated by additional fees and work needed to get your house ready.

If you’re thinking about buying new appliances, check out our guide on energy efficient appliances to see how else you can save money in the long run.

Electric Vs. Gas: Hot Water Running Costs

Hot water systems can run on either gas or electricity, although the running costs are more likely determined by the type of hot water system you have rather than what powers it. However, like most appliances, gas hot water systems are cheaper to run, but are more expensive to purchase, while electric hot water systems are cheaper to buy initially, but cost slightly more to run.

• Hot water systems generally also have an energy rating, allowing you to get more of an idea of how much energy each model consumes.

Electric Vs. Gas: Heating Running Costs

Gas heaters are generally able to heat up small-to-medium sized rooms quicker and more efficiently than electric heaters, although are generally also more expensive to purchase, and may require a flue to help expel fumes in some cases. However, electric heaters are generally more widely available, allowing you to find something potentially more suitable for the space you’re trying to heat, which may help you get more value for the higher running costs.

Electric Vs. Gas: Stove Running Costs

Cooktops are another household appliance that are available as either an electric or gas model, with gas models generally thought of as a better option for cooking as they heat up quicker than electric types, in addition to having a slightly lower running cost. However, electric stoves are generally cheaper to purchase and install, making it an argument of short-term savings versus long-term savings.

How much does a natural gas connection cost?

If you like the idea of natural gas, but you don’t have a pre-existing connection, then you will need to organise a connection with your local gas distribution network. The price for gas connections can be anywhere from a few hundred to a few thousand dollars, depending on the network and the complexity of the work that needs to be performed.

If you’re nowhere near a mains network, your only option may be LPG. Also keep in mind that if you are renting, you will need your landlord’s permission before installing any gas connections or appliances.

To see if you are eligible for a mains natural gas connection, contact your gas distributor.

Pros and cons of electricity and gas

While the costs may be the determining factor, it’s important to weigh up the pros and cons of each fuel type, as you may find other factors outweigh the cost. The below table explores the pros and cons of both electricity and gas.

Determining what’s cheaper for your household can be tough to calculate, particularly when you need to factor in installation costs, daily usage rates and even new appliance costs before you even flick a switch. While gas generally has a slightly cheaper running cost, gas appliances and installing a gas connection if you don’t already have one can quickly outweigh the cheaper running costs, and potentially even make it the more expensive option of the two.

Is gas cheaper than electricity?

However, whichever option ends up cheaper and more suitable is entirely dependent on your situation, household location and general preferences. If you’re a distance away from an electricity grid, gas may be your only option, while those who already have access to the gas main may find opting for gas appliances cheaper in the long run. However, it’s always best to do your research before buying any new appliances or looking to install new connections. And if you get stuck, you can always check out our ratings for gas and electricity providers to see what’s out there and what else to consider.