The recent article on transitioning away from gas provided an overview of the reasons to transition, some of the challenges involved and the ways to address them.
While I was researching that article I came across an interesting Australian case study of the transition process: Esperance, a town of about 12,000 people in the Goldfields region of Western Australia. In September 2021 the Infrastructure Capital Group (ICG) gave its customers notice that it would stop supplying reticulated gas to the community in March 2022. This was a purely economic decision – obviously they had worked out that supplying the gas was not worth their while.
In response the Western Australian Government asked Horizon Power, its government-owned regional energy supplier, to coordinate a transition program, negotiating an extra 12 months of supply from the gas company to allow the transition to take place. Horizon then managed a thorough process to contact affected residents (privacy laws prevented ICG from sharing details with Horizon, so this required a huge information campaign) and case managed the transition for 300 affected households (including 76 public housing tenancies) and 30 businesses.
The WA Government provided generous funding for the transition – each household and business was entitled to the full cost of a ‘like for like’ replacement of their gas appliances (stoves, air-conditioners and hot water systems) including installation costs, with a choice of electricity or LNG (bottled gas). Households could elect to upgrade if they paid the additional cost themselves. Horizon estimates the average cost for replacing all three items was around $14,000.
In the event, about 75% of residents chose to shift to all-electric, along with 38% of businesses. While people went for a variety of cookers, the large majority went for heat pump hot water systems and (where relevant) split system air-conditioners. This means they could maximise their energy-efficiency savings. The Housing Department project managed the transitions in its housing - they transitioned all the homes to fully electric, with electric ovens and cook-tops, split system air-conditioners and either heat pumps or solar hot water systems. For the businesses the transition was a little more complex as for many there was either no commercially available alternative to gas for their industry, or the level of retrofitting of their business was too great.
For the private residential customers, Horizon engaged in quite ‘hands-on’ case management. They required all the tradespeople doing the work to register and paid them directly rather than reimbursing the residents, ensuring that the process wouldn’t create a cash issue for lower-income residents and providing a level of customer assurance of the quality of the work. They also took a flexible approach to their program guidelines, understanding that not all homes fitted a standard process or solution.
Horizon Energy’s evaluation of the program shows a 94% customer satisfaction with the program, and also estimates that residential customers who switched to all-electric appliances saved an average of 38% on their overall power costs. All were successfully transitioned by the extended 31 March disconnection date – no mean feat in the current building environment and in a regional location.
Some thoughts
It seems to me that there are a few things we can learn from this experience.
The transition is perfectly feasible, and can be done in a reasonable time-frame provided money is no object. Of course, this is on a small scale, and the approach may not necessarily scale up. Imagine if rather than Esperance, the gas company had decided to cut off reticulated supply to Perth!
The second is that the cost savings claimed by the various researchers and advocates are borne out in practice. The transition to all-electric really does save people money.
The third thing, which I find curious, is that the gas company, aside from extending its deadline, appears to have suffered no penalty and borne no costs for its decision to make a rapid exit. It looks to me like an object lesson in the risks of privatising our essential infrastructure. Instead of ICG compensating their customers it was the government that came up with the money – they don’t give a full figure but I would suggest based on the information in their report they would have spent somewhere around $2.5m just on the residential component. This is not a huge sum in the scheme of government finances, and arguably money well spent, but it’s hard to see the same response for larger communities if it becomes uneconomical to supply gas elsewhere.
When we get serious about the larger scale transition, it will obviously need a bit more planning than happened here, and a much longer lead-time, but here we have a live example that it is possible!
Resources
I first heard this story via a story on Switched On – read it here.
You can check out Horizon Power’s detailed evaluation report here.
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