What’s cheaper: Electricity or gas?

When it comes to powering your home, you have two fuel types to choose from – electricity and gas. While both options have their pros and cons, for a lot of us, the price tag is the ultimate decision maker, so it pays to know how much both electricity and gas will cost you, and which one is the cheapest.

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.


Advertisement

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.

Cheap Electricity Deals

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

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.

Cheap Gas Plans

Gas Plans Compared in VIC

Here are some of the cheapest gas deals on our database for VIC. These estimated annual costs are based on the Australian Gas Network in Melbourne and yearly gas usage of 29,830MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table includes products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Gas Plans Compared in NSW

Here are some of the cheapest gas deals on our database for NSW. These estimated annual costs are based on the Jemena Gas Network in Sydney and yearly gas usage of 18,542MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table includes products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Gas Plans Compared in WA

Here are some of the cheapest gas deals on our database for WA. These estimated annual costs are based on the ATCO Network in Perth and yearly gas usage of 27,620 (units), but prices may vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table includes products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Gas Plans Compared in SA

Here are some of the cheapest gas deals on our database for SA. These estimated annual costs are based on the Australian Gas Network in Adelaide and yearly gas usage of 11,875MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table includes products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

Gas Plans Compared in QLD

Here are some of the cheapest gas deals on our database for QLD. These estimated annual costs are based on the Australian Gas Network in Brisbane and yearly gas usage of 6,842MJ, but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest estimated cost. This table includes products from referral partners†. Our database may not cover all deals in your area, and please check retailer websites for up to date information.

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.

Appliance Electricity Running Cost (p/hour) Gas Running Cost (p/hour)
Stovetop
(1.1kWh/6MJ)
27.5c 24c
Heater (2.4kWh/13 MJ) 60c 52c
Clothes Dryer (3.3kWh/15MJ) 82.5c 60c
Hot Water System*
(12kWh/60MJ)
300c 240c

*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

whats-cheaper-electricity-or-gas-web

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.

Fuel Type Pros Cons
Electricity
  • Most homes already have a connection
  • Most common fuel type, with plenty of competition within the industry for cheaper rates
  • Electric appliances are cheaper to purchase
  • Higher running costs
  • Higher environmental impact if produced from coal
Gas
  • Cheaper running costs
  • Some gas appliances, such as gas heaters, are more efficient
  • Gas appliances are generally more expensive to purchase
  • Less common connection type, with connection fees potentially expensive
  • Potential threat of gas leaks and carbon monoxide poisoning

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.

Share this article