GREENS BILL: Ban mandatory gas connections in new housing developments

Today Mark introduced a Greens Bill to outlaw the practice by housing developers to lock families into legally-binding arrangements that force them to use fossil fuels in their homes.

Planning, Development and Infrastructure (Gas Infrastructure) Amendment Bill 2018

Despite all of the recent innovations in energy efficiency, in renewable energy and energy storage, there are many South Australian families who are being locked in to higher energy bills and they are being locked into a lack of choice thanks to the unconscionable conduct of certain property developers in South Australia. These developers want to stop South Australian families from being able to choose what type of energy to use in their homes and they do this by locking them in to legally-binding arrangements that force them to use fossil fuels in their homes forever.

This might sound like a ludicrous proposition, but it is exactly what a number of property developers are doing today in South Australia. The way they are doing it is through legally-binding covenants that are registered on the certificates of title for new house and land packages in the new housing estates. The deal is that if you want to buy into one of these new housing estates, you have to sign on the dotted line, you have to agree to connect to gas and you have to agree to use gas at the very least for heating your home and for heating your hot water. You are legally prevented by these arrangements from becoming an efficient all-electric home.

It is now clear that all-electric homes are the cheapest households to run. If you add solar panels into the mix, the difference is substantial. In Adelaide, you can save up to $14,000 over 10 years by going all electric compared to a dual fuel home that uses both electricity and gas. For example, these savings, up to $14,000 over 10 years, are being denied to some residents of Mount Barker who are buying into new housing estates such as the Springlake development.

My bill is simple: it outlaws this practice. It declares null and void any attempt to force households to use fossil fuels in their homes if they do not want to. It puts energy choice back into the hands of South Australian families and it frees up the opportunity for them to save money and to contribute to reducing carbon emissions and reducing our pressure on the climate.

I will give some background. We know that renewable energy is rapidly taking over the energy market, and this is a challenge to existing power companies, especially those that sell or distribute gas. Already, the gas-fired electricity generators are under pressure, and now householders are turning away from gas as well.

Gas companies are desperate to maintain their market share for domestic heating, cooking and hot water now that new electric technologies are cheaper and more efficient. One technique that they have used is to require property developers to mandate the use of gas in new housing estates. In other words, the purchasers of these new house and land packages are legally obliged to connect to gas and to use it for some or all of their energy needs. They are not allowed to become all-electric homes.

I mentioned that the technique used legally was a covenant. Another word that is often used is an encumbrance. We are familiar with the use of restrictive covenants or encumbrances in housing estates. Often they are used to try to maintain the quality of the neighbourhood. For example, they include conditions about fences, setbacks, roofing materials or carports, those sorts of things. These restrictions go above and beyond what the government's planning rules require. Those planning rules apply to everyone, but these special encumbrances or covenants apply only to those who have signed in to these particular house and land packages.

If you do a Google search of various property developers and housing estates, you will come across a few, but I am drawing the council's attention to Springlake. Originally, they were going to provide reticulated liquid petroleum gas to all houses in their development and then switch to natural gas after a new natural gas pipeline is connected. My understanding is that this arrangement between, I presume, the property developers of Springlake and gas companies is to help boost the business case for the new gas pipeline.

This business case is currently before the Australian Energy Regulator to decide whether or not to allow it to go ahead. If you want to build a business case, what better way than saying, 'By the way, here are so many hundreds'—or thousands—'of new customers that are going to connect. We know they are going to connect, because we have made them connect. We have mandated their connection.'

I refer the council to the design guidelines for the Springlake development in Mount Barker. Page 8 of their design guidelines states:

Springlake is providing reticulated LPG throughout the development. A gas connection will be provided to the front of each allotment. It is mandatory that each house connects to the LPG system.

Minimum gas connection requirement:
Gas heating
Gas hot water service

Note: if you will be connecting a solar hot water system, a gas boosted system will be required.

It goes on to tell you who to contact to get your gas connected. That is a mandatory provision for anyone who wants to sign up to a house and land package in this estate.

What I think is at play here is the business case for Australian Gas Networks trying to get their Mount Barker natural gas extension up and running. I do not know what commercial or financial relationship they have with the property developer, but it seems to me remarkable that in this day and age we have, with full force of law, presumably, the ability to lock people in to having to use fossil fuels in their homes. It seems quite remarkable.

I made the assertion earlier that an all-electric home is cheaper than a dual fuel home. Where does that come from? That came from the most recent household fuel choice study. The title is 'Household fuel choice in the National Energy Market'. It is a report that came out in May 2018 by the Alternative Technology Association. They updated this report in August of this year. It is the most comprehensive report that goes through all the climatic variations around Australia and prices the difference between an all-electric home and a dual electric-gas home in major urban areas.

I will refer to a couple of sections of this report. I will start with their recommendations. There is a recommendation, but the major finding that supports the recommendation states:

The major finding of this study, is that by choosing an all-electric home with solar PV, a new home buyer will be in the order of $9k to $18k better off over 10 years, as compared with establishing that home as dual fuel (i.e. electricity and gas) without solar.

They then go on to state:

Given the rate of connection to the reticulated gas grid of new homes in the major Australian cities, it is imperative that consumers understand the significant cost impact of choosing to establish a new home as dual fuel versus all-electric with solar.

That ties into recommendation 1, which is about education. I do not think that is enough. I think we need a bill such as the one I am introducing today to prohibit the mandatory connection to gas. For those who are familiar with the planning system, regular houses are referred to as class 1 dwellings. The report states:

To continue to promote reticulated gas to new Class 1 dwellings is to lock most of those new home buyers into significantly higher energy costs for the medium to longer term.

The report then goes on at page 18 to set out a chart that has Adelaide as a column—and it has other major population centres as well—and it shows you what the average cost saving is. As I said before, for Adelaide, for a new house with solar panels, it is about a $14,000 saving over a 10-year period. Without the solar panels there is still a saving, but it is not as much. The finding is clear:

Go All-Electric with Solar

For new homes, the best choice is clear: go all-electric and install solar PV…In every location around Australia, the model found significant value (between $9k and $18k over 10 years) from establishing a solar/all-electric home instead of a dual fuel home (i.e. gas and electric) with no solar.

As I said, for Adelaide the amount was $14,000. The problem I think is fairly clear, that, given all the attention that is being paid to energy prices by I think all political parties, everyone is alert to energy prices. We have had the federal government coming out and talking about what they are going to do. It is mostly smoke and mirrors, but they are saying what they are going to do about energy prices. Here we have, in South Australia, legal mechanisms which enable mandatory connection to gas and, therefore, by implication force people into higher energy bills over the long term.

This bill is really quite straightforward, for those members who have had a chance to look at it. It has one operative provision. It inserts new section 243A into the Planning, Development and Infrastructure Act. The title of that new section will be 'Requirements to connect to gas infrastructure void', and the operative provision is: if they try it on, it is not enforceable. In other words, any attempt to force people to connect to gas is not enforceable.

We have to make it very clear that, if people voluntarily want gas, absolutely they can sign up to gas. This is not saying that gas is being outlawed in new developments, it is not saying that gas has become an illegal product. It does not say that at all. It is just saying that these property developers cannot make it a mandatory condition of house and land packages that you must connect to gas. If they try it, the contract is null and void.

I think it is only a matter of time before the penny drops for most South Australians. There will be concerted campaigns from people who have crunched the numbers, and it will be one of those watercooler, barbecue, front bar conversations along the lines of, 'What? You're still connected to gas? Don't you realise how much you're paying?' That will be the conversation that people around Australia are having. How sad would it be if the response at the barbecue, watercooler or front bar was, 'Yes, I'd love to get off it but I'm legally bound, and I'm legally bound because the South Australian parliament did nothing to protect me'? I think that would be an outrageous situation.

This is a very simple bill. It simply says this is not a practice that is acceptable. It is not acceptable to the parliament, it is not acceptable to the community and it is certainly not acceptable to the climate.

For more information see a copy of the Bill