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Everything you need to know about natural gas

Natural Gas Explained

What is Natural Gas?

Natural gas is a common energy source that helps power many Australian homes through a connection to the gas distribution network. Natural gas is known as a ‘fossil fuel’, consisting primarily of methane, which is an odourless and highly combustible gas.

What’s powered by natural gas?

Natural gas is primarily used for residential, commercial and industrial purposes, as well as electricity generation. In households, natural gas can be used for cooling and heating for gas-powered air conditioners, stovetops for cooking, and appliances like barbecues, fireplaces, pool heaters and tumble dryers.

Where is natural gas used?

Natural gas is most commonly used for heating and water heating in Victoria, while residents in Queensland tend to use natural gas for cooking and appliances like barbecues, due to the warmer climate. According to the Department of Energy, natural gas accounted for 25% of energy consumption in Australia from 2016-17.

Natural gas is also used for commercial and industrial businesses who require constant or largescale heating, cooling and cooking. Additionally, gas helps generate electricity across Australia by using gas turbines, steam generation units and combined cycle units, all of which have their own unique method of turning natural gas into electricity.

What are the advantages of natural gas?

There are many financial and environmental benefits of having natural gas in your home, including:

  • Reliable source of energy that’s connected to millions of Australian homes
  • Cost-effective solution for gas cooking, hot water and heating
  • Fewer greenhouse gas emissions compared to other fossil fuels like coal

What are the disadvantages of natural gas?

Although natural gas is considered a cleaner energy source as opposed to other fossil fuels like coal and oil, it does have some disadvantages, including:

  • Non-renewable energy source (i.e. gas can be depleted)
  • Extremely flammable and toxic that can lead to dangerous situations such as gas leaks or explosions
  • Emits carbon dioxide, monoxide and other hazardous compounds into the air when burned
  • New gas connections can be expensive depending on where the gas main is located, where the gas meter will be installed and how much pipework is needed to be fitted into your walls

Where does natural gas come from?

Natural gas is sourced from onshore and offshore gas fields in Australia, particularly oil or coal steam wells, which are then drilled to a depth that can extract gas from these deposits. Most of Australia’s natural gas is sourced from inland Queensland, Bass Strait, northern South Australia, offshore Western Australia and the Timor Sea above the Northern Territory.

Is Natural Gas Renewable?

Although natural gas is not a source of renewable energy, it does release fewer greenhouse gas emissions than electricity generated from other fossil fuels like coal. Natural gas is Australia’s third highest source used for electricity generation by power stations after coal and oil, according to the Australian Energy Regulator (AER).

What if I don’t have a natural gas connection?

If you don’t already have a natural gas connection, you can apply to have it connected to your home from a chosen gas supplier that meets your needs. Alternatively, you can opt for Liquefied Petroleum Gas (LPG), which comes in pressurised cylinders and is usually delivered to your door.

Just keep in mind that if you’re looking to connect gas to your home, installation costs can be expensive depending on a few circumstances, like how close your property is located to a gas main or how much pipework is required to carry out the job.

If you’re chasing LPG, it’s important to weigh up the cost of transportation and delivery, especially if you live rural. Furthermore, you will need to think about replacing and refilling your LPG cylinders once they’re empty.

List of Gas Suppliers

Depending on where you live, there could be as many as 15 gas suppliers available to choose from in your area. Here is a list of the gas suppliers that operate across the country.

Gas Suppliers in Victoria

  • AGL
  • Alinta Energy
  • Amaysim Energy
  • Click Energy
  • CovaU
  • Dodo Power & Gas
  • EnergyAustralia
  • GloBird Energy
  • Lumo Energy
  • Momentum Energy
  • Origin Energy
  • Powershop
  • Red Energy
  • Simply Energy
  • Sumo

Gas Suppliers in NSW

  • AGL
  • Alinta Energy
  • Amaysim Energy
  • Click Energy
  • CovaU
  • Dodo Power & Gas
  • EnergyAustralia
  • Origin Energy
  • Red Energy
  • Simply Energy

Gas Suppliers in Western Australia

  • AGL
  • Alinta Energy
  • Kleenheat
  • Origin Energy
  • Perth Energy
  • Simply Energy

Gas Suppliers in Queensland

  • AGL
  • Origin Energy
  • Red Energy

Gas Suppliers in South Australia

  • EnergyAustralia
  • Origin Energy
  • AGL
  • Simply Energy

Gas Suppliers in Tasmania

  • Aurora Energy
  • Tas Gas

Gas Suppliers in ACT

  • ActewAGL
  • EnergyAustralia
  • Origin Energy

While there are many gas suppliers to choose from in some areas, keep in mind that some only sell gas when you also purchase electricity.

Best-Rated Gas Suppliers

Canstar Blue publishes annual customer satisfaction ratings for natural gas suppliers in Victoria, NSW, Western Australia, Queensland and South Australia, as well as dual fuel energy providers and LPG suppliers.

Our annual reviews are based on the feedback of bill-paying customers, with the latest ratings as follows:

Best-Rated Natural Gas Suppliers in Victoria:

  • 1st Momentum Energy
  • 2nd Dodo Power & Gas
  • 3rd Red Energy
  • 4th Alinta Energy
  • 5th Simply Energy
  • 6th Lumo Energy
  • 7th EnergyAustralia
  • 8th Origin Energy
  • 9th AGL

See here for further details on the ratings and our methodology.

Best-Rated Natural Gas Suppliers in NSW:

  • 1st Red Energy
  • 2nd Origin Energy
  • 3rd EnergyAustralia
  • 4th AGL

See here for further details on the ratings and our methodology.

Best-Rated Natural Gas Suppliers in WA:

  • Kleenheat
  • AGL
  • Alinta Energy

See here for further details on the ratings and our methodology.

Best-Rated Natural Gas Suppliers in QLD:

  • 1st AGL
  • 2nd Origin Energy

See here for further details on the ratings and our methodology.

Best-Rated Natural Gas Suppliers in SA:

  • 1st EnergyAustralia
  • 2nd Origin Energy
  • 3rd AGL
  • 4th Simply Energy

See here for further details on the ratings and our methodology.

Gas Plans, Rates & Charges Explained

Gas Plans

Many households sign up to electricity and gas with the same supplier, but in some cases, you can sign up to different gas and electricity suppliers. Standalone gas plans are very similar to electricity plans in that they include usage and supply charges, plus various fees and conditions. Some will also include conditional discounts to help customers reduce their overall costs.

Gas Usage Charges

Gas usage charges represent one portion of your gas bill which are measured in cents per megajoule (MJ), and are usually charged on a ‘block rate’ basis, meaning the more gas consumed, the lower the usage rate will likely be for subsequent ‘blocks’ of usage. Usage charges are recorded via a gas meter and will be detailed on your bill.

Depending on where you live, your usage charges may vary according to your gas supplier’s usage rates.

Gas Supply Charges

Gas supply charges represent the fixed portion of your bill and reflect the cost of being connected to the mains gas network. Supply charges are generally measured in cents per day (e.g. 70 cents per day) or as a total sum amount for your billing period (i.e. 90 days).

It’s worth noting that you will be billed for supply charges regardless of how much gas you actually use.

What is a Megajoule (MJ)?

A megajoule (MJ) refers to a unit of energy equivalent to one million joules, which is how your gas is measured and recorded. Your gas bill will detail your usage information in MJs and most gas appliances will generally list their energy consumption in terms of megajoule-hours (MJ/h).

Gas Rates

Natural gas prices are charged in cents per megajoule (the unit of measurement for gas). Natural gas usage rates will generally cost between 1.5 and 4 cents per megajoule, depending on where you live. To put this into perspective, a typical gas oven will use around 12 megajoules an hour.

If you have a time of use tariff, the amount you pay for gas will change depending on the time of day you use it. In some areas, gas usage is also broken into daily ‘blocks’, with the first block of power usually costing the most. For example, you could:

  • Pay 2.6 cents per megajoule (MJ) for the first 100 megajoules
  • Then pay 2.2. cents per megajoule for the next 100 megajoules
  • Then pay 1.8 cents per megajoule for the next 100 megajoules

Gas Discounts Explained

Like electricity plans, gas plans often include conditional discounts to help customers reduce their overall costs. The most common types of gas discounts are:

  • Pay on time discounts: a discount that applies when you pay your bill, in full, on or before the due date
  • Direct debit discounts: depending on the supplier, setting up payments via direct debit may entitle you to a discount
  • Double up discounts: by bundling your gas and electricity, your supplier may offer you an extra discount

It’s important to note that the biggest discounts don’t always mean the biggest savings. This is because retailers charge different base rates, meaning you could simply be getting a big discount off a very large bill, for example.

To give you an idea of how discounts impact overall costs, check out the following price guides:

Which suppliers offer gas and electricity bundles?

Getting both your electricity and natural gas from the same provider could prove beneficial, both from a convenience perspective as well as financial, especially if additional discounts are offered for doing so. If you’re in the market to bundle your electricity and gas, you can compare various deals from a range of dual fuel providers, including:

  • Simply Energy
  • Dodo Power & Gas
  • Lumo Energy
  • Momentum Energy
  • Red Energy
  • AGL
  • Alinta Energy
  • Energy Australia
  • Origin Energy
  • ActewAGL

Not all providers operate in all areas.

What should you look out for when choosing a gas supplier?

If you’re in the market for a natural gas supplier, it’s important to shop around for a competitive deal. Deregulation in the energy industry means that most Australians now have the freedom to choose their electricity and natural gas supplier. This means gas suppliers are now competing for your business by offering the best deals possible, as well as various rewards programs and other sign-up initiatives.

Here are some points to keep in mind when comparing gas suppliers:

  • Are you happy with how long the contract lasts?
  • What happens if you move house; are there any fees associated with moving?
  • What tariff or rate will you be charged for your gas usage?
  • How often will you receive a bill?
  • Are there any late payment fees and how much are they?
  • Are there any disconnection or exit fees?

Something to remember: Just like your electricity contract, a 10-business day ‘cooling off’ period applies to your gas contract. This means you’re entitled to change your mind and end the contract without having to pay any fees.

How to switch natural gas suppliers

You don’t have to wait until the end of your plan to switch gas suppliers, however you’ll need to keep in mind that if you prematurely end your contract, there may be costs involved. Make sure you do your research and find out if you are going to be charged an exit fee before setting the wheels in motion to switch.

Once you’ve completed your research and landed on a retailer you want to switch to, you can:

  • Contact your current gas supplier and request a final meter reading and bill
  • Call the gas supplier you’d like to switch to and they will organise your new account

If you agree to a contract with another gas supplier, it could take several months before the transfer fully goes ahead. This will depend on when your next meter reading is scheduled. Once the transfer is complete, you will receive a final bill from your previous gas supplier and your new one will take over your account.

Compare gas prices NSW

As the majority of NSW households are connected to the Jemena gas distribution network, we’ve compiled some of the cheapest natural gas plans from seven major retailers for an average household within this area, which we estimate uses around 50.8 MJ of gas per day. The prices below factor in gas usage and supply rates as well as conditional discounts that are available on the retailer’s cheapest market offer. Keep in mind that this estimate can be above or below your individual usage, so the table below should only be used as a guide indicating what retailer might offer the best deals, rather than as a specific quote.

Gas Supplier^ Gas Plan Discount Annual Cost* Important
Amaysim Energy Gas As You Go 0% $713 Basic Plan Information
Red Energy* Qantas Red Saver 10% $737 Basic Plan Information
AGL Essentials 0% $737 Basic Plan Information
Alinta Energy* Fair Deal Gas 18% $739 Basic Plan Information
Origin Energy Maximiser Online 15% $744 Basic Plan Information
EnergyAustralia Anytime Saver 22% $755 Basic Plan Information
Click Energy Click Burgundy 11% $794 Basic Plan Information

“Annual cost estimates based on daily gas usage of 50.8 MJ, May 2019. Gas prices based on gas provided through the Jemena gas network. *Product and discount only available where the customer purchases both gas and electricity from the same retailer. There may be other retailers available in your area.

^By clicking on a brand name, you may leave Canstar Blue and be taken to a referral partner to compare. You agree that Canstar Blue’s terms and conditions apply to this referral. If you click on a brand that is not a referral partner, you will be taken to a brand page on Canstar Blue.

Compare gas prices Victoria

We’ve calculated the estimated cost of natural gas for a typical Victorian home on Australian Gas Network Zone 2 in Melbourne, so you can get a better idea of what you should expect to pay for your usage. Our estimates are based on household gas usage requirements of 81.5 MJ a day, which is roughly what a household in the above scenario might use. Keep in mind that the calculations below are based on a specific scenario, and not all households will use this this amount of gas or be charged the rates available in this area. Even for households with similar usage requirements, what’s below should only be thought of as a general indicator of which retailer might offer the cheapest natural gas. The annual cost below factors in usage and supply rates and discounts on the provider’s best market offer.

Gas Supplier^ Gas Plan Discount Annual Cost* Benefit Period
Powershop Gas Saver 5% $818 Ongoing
Origin Energy One Low Rate 0% $852 1 year
Dodo Power & Gas* Everyday Gas 20% $852 Ongoing
AGL Essentials 0% $873 1 year
Simply Energy* Simply RACV Plus 30% $884 2 years
Alinta Energy* Fair Deal Gas 25% $891 1 year
Red Energy* Qantas Red Saver 10% $902 Ongoing
Lumo Energy* Lumo Value 5 5% $906 Ongoing
GloBird Energy Gas GloSave 31% $907 Ongoing
Momentum Energy Momentum Gas 0% $915 Ongoing
EnergyAustralia Anytime Saver 30% $919 2 years
Amaysim Energy Gas As You Go 0% $933 Ongoing
Click Energy Click Burgundy 26% $1,015 Ongoing

“Annual cost estimates based on daily gas usage of 81.5 MJ a day, May 2019. Gas prices based on gas provided through Australian Gas Network Zone 2 in Melbourne. *Product and discount only available where the customer purchases both gas and electricity from the same retailer. There may be other retailers available in your area.

^By clicking on a brand name, you may leave Canstar Blue and be taken to a referral partner to compare. You agree that Canstar Blue’s terms and conditions apply to this referral. If you click on a brand that is not a referral partner, you will be taken to a brand page on Canstar Blue.

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