A Single Upgrade Wiped Out Most Our Gas Bill

Getting off gas is a multi-year process for many households – replacing hot water, heating and cooking appliances can be an expensive initial outlay to get done all at once. But as I found with my first gas bill after getting a hot water heat pump, even getting just one appliance upgraded can make a big difference.

How Much Does A Heat Pump Cut Gas Bills?

I took a big step towards quitting gas earlier this year, ripping out our gas hot water system and replacing it with an iStore hot water heat pump.

We’ve still got the gas cooktop and stove to replace before our home can disconnect from the gas network entirely, but there’s been an immediate impact on our bills already.

The heat pump was installed roughly 3 months ago – exactly aligning with my gas billing period, giving a stark before-and-after picture.

I got my first gas bill since the install earlier this week, and saw that it had plummeted to just $84, down from $172 the previous quarter (and $213 the quarter before that).

The overwhelming majority of what remains is the supply charge, as you can see from the chart below that came with my gas bill. Our actual gas consumption has almost completely evaporated, as much more gas is used by hot water systems than by cooktops and ovens.

Our hot water heat pump was installed on March 2 – the same day as a gas meter read, giving a clear picture of our home’s gas consumption pre and post install. The ‘current read’ date was May 29. Gas use dropped from 11.37 MJ a day on average before the heat pump upgrade, down to 0.86 MJ afterwards.

What To Do About The Supply Charge

It is great to get a start on recouping the cost of the hot water heat pump (for us, it was roughly $2,100, after rebates secured through the Energy Masters program), but to further shorten the payback period, we’ll still want to completely disconnect from gas and stop paying the supply charge. We are planning a kitchen renovation in the near term that will involve replacing our gas oven and cooktop with induction, leaving us gas-free.

It’s part of the messy reality of home electrification: upgrades won’t all get done at once, particularly with the initial investments required for each appliance.

In our case, we’re deciding between a couple of stopgap solutions on what to do in this interim period before the kitchen reno gets underway:

• Buy a plug-in induction cooktop and an air fryer, so we can disconnect from gas immediately and not have to pay supply charges anymore (plus reap the health benefits of not burning gas inside our home);
• Alternatively, switch to a gas retailer with cheaper connection fees and higher gas usage costs – in our area, gas connection fees vary from roughly 69c a day up to $1.08, depending on the retailer (we would still have to factor in fees for changing retailer).

What About Our Electricity Bill?

The gas savings aren’t just getting transferred over to our electricity bill either. Hot water heat pumps are extremely energy efficient, and we’ve configured ours to ramp up during the middle of the day when our solar has it covered – the hot water stays hot in the storage tank through the rest of the day, so we haven’t had to use electricity during peak periods to reheat water in the evening or early morning.

Our electricity bill was $10 last month – and that effectively covered our petrol and heating expenses as well, with an EV in the driveway and a sizable ducted reverse-cycle system in the house, together eliminating our energy expenses and carbon emissions at the same time.

Australian Homes Are Reducing Gas Use Well Before Quitting It

A new Grattan Institute report that landed in my inbox the same day as that gas bill confirms that many Australians are on a similar trajectory off gas as us – first reducing consumption before quitting gas completely.

Household gas use in Australia has been on the decline since its peak in 2022, dropping 16% over that period, but the total number of homes connected to gas only fell (marginally) for the first time in 2025.

Getting Off Gas Heating Offers Even Bigger Savings

Our home didn’t have gas heating, but if it had, our top priority might have been to replace it with reverse-cycle air conditioning. The potential savings of switching gas heaters over is even greater than for hot water.

On the chart below, the number on the left shows the typical savings from quitting gas for homes without gas heating, while the number on the right shows the much larger savings for those with gas heating.

These savings factor in the upfront cost of buying new appliances.

Many Australians Are Quitting Gas Without Realising It

The report found that even households not actively engaged in getting off gas are, well, getting off gas anyway. Gas plants are carrying the load for less of Australia’s peak electricity period as energy exported from batteries takes centre stage – whether that is big grid-scale battery storage systems, or the home batteries that have proliferated since the introduction of the federal rebate.

Batteries are now primarily setting morning and evening peak prices instead of gas, which is part of the reason electricity prices are set to fall by up to 10% from July.

Don’t Get Caught In The Gas Grid Death Spiral

As home electrification continues to gather pace, the report warns that the decline of gas in Australia needs to be better managed to achieve an orderly transition and avoid leaving some homes behind, stranded in an ever-more-expensive gas grid death spiral.

The Grattan Institute recommends measures such as the government setting an end date for household gas use, banning new gas connections, removing gas appliances from social housing, and providing landlords with incentives to replace gas appliances with electric ones for renters.

Gas looks to only be getting more expensive going into the future, so it makes sense to start replacing your gas appliances without delay.

Going full home electrification all at once so you can stop paying the gas supply charge is ideal, but even if you aren’t in a position to shut it off entirely straight away, you’ll start saving from the first gas appliance you replace.

For more on the financial savings from ditching gas, read our explainer on how getting off gas saves you money.