Gas prices for Evoenergy customers will rise by 3.2 per cent for the average household between 2021 and 2026, following a decision handed down by the Australian Energy Regulator on Friday.

While the average gas bill for retail customers will drop by $10 for 2021-22, prices will increase by 1 per cent, or $14, each financial year after that for the next four years.

Small businesses will get a reprieve of $90 on their annual gas bill next financial year, but the rate will increase by $127 every year after that until 2025-26.

The decision by the energy regulator was in response to Evoenergy's five-year gas-network plan, which was submitted for review in June 2020.

The changes will come into effect from July 1 this year.

The price hike put forward by the regulator was less than what was initially proposed by Evoenergy, which would have seen bills rise by an extra $26 for residential and $238 for small businesses.

The regulator said that was due to it predicting a less dramatic decline in gas use in the ACT than the estimate put forward by the energy distributor.

"Our final decision determines a more moderate forecast decline of 9.8 per cent in ACT residential gas demand beyond the observed historical decline in demand, compared to Evoenergy's proposed 22.3 per cent by the end of the 2021-26 period," the regulator said in its decision.

"In the current circumstances, we acknowledge there is increased volume forecasting uncertainty in the 2021-26 period, and the use of historical trends might not be the best representation of the future."

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The decision by the regulator comes as the ACT government looks to phase out the use of gas as part of its climate change policies.

The territory government has said it aimed to reach net-zero emissions by 2045, with subsidies being put in place for residents who want to convert gas appliances to electric as part of its sustainable household scheme.

Eligible residents will be able to receive interest-free loans of between $2000 and $15,000 to go towards initiatives including switching appliances from gas to electric ones,

Of the more than 3500 people who have already expressed in the scheme, 20 per cent of applicants said they were looking to undertake such a conversion.

The government scheme is expected to start in July this year.

In its decision, the regulator said the "evolving" policies of ACT in the area had been a key issue for Evoenergy's planning for the gas network.

A spokesman for Evoenergy said they welcomed the regulator's pricing proposal.

"The coming five years will be a critical time for our gas network as we plan for a responsible transition to achieve the ACT's net-zero greenhouse-gas emissions by 2045 target," the spokesman said.

"We will continue to work with the community and the ACT government as we plan this transition."

The government has said it would not connect new suburbs to gas networks as part of the transition process.

Proposed gas connections are being removed in Whitlam in Canberra's west as the suburb develops.

"The AER recognised the complex challenges our gas network faces as we plan to reduce emissions from gas," the Evoenergy spokesman said.

"The AER's final decision anticipates a steady decline in gas connections and demand for gas over the next five years, but not as steep a decline as we had forecast in our revised proposal."

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