How commercial gas pricing works (MJ vs GJ explained)

Commercial gas pricing in Australia is usually made up of two parts: a fixed daily supply charge and a variable usage charge that is priced in either cents per megajoule (c/MJ) or dollars per gigajoule ($/GJ). Because 1 GJ = 1,000 MJ, converting the units correctly is the key to comparing quotes and avoiding pricing that looks cheaper than it really is.

What MJ and GJ mean on a business gas bill

MJ (megajoule) and GJ (gigajoule) are both units of energy. Gas retailers use them so your bill reflects the actual energy content delivered, rather than just the volume of gas.

1 GJ = 1,000 MJ
1 MJ = 0.001 GJ

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Some retailers quote business gas rates in c/MJ (common in small business retail contracts). Others, especially for larger users or tendered deals, quote in $/GJ. The underlying unit cost is the same once you convert.

How commercial gas is measured and converted for billing

Your gas meter may record usage in cubic metres (m³) or in MJ depending on the meter type and distribution network. Where the meter records volume (m³), the bill converts volume to energy using factors shown on the bill (these can vary by location and billing period):

Volume conversion factor: adjusts for temperature and pressure
Heating value (also called calorific value): the energy content per m³ of gas

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In simple terms:

Gas usage (MJ) = Metered volume (m³) × Conversion factor × Heating value

This is why two sites with the same m³ usage can end up with slightly different MJ usage if the heating value differs.

What makes up commercial gas pricing in Australia

When you look at a quote or an invoice, break it into components so you can compare like-for-like.

1) Daily supply charge

This is a fixed amount charged per day for being connected to the gas network. You pay it even if your usage is zero. Supply charges matter a lot for:

Seasonal businesses that use gas heavily only in winter
Sites with low usage where fixed charges dominate the bill

2) Usage charge (the energy rate)

This is the variable part of the bill and is priced in either:

c/MJ, for example 3.5 c/MJ
$/GJ, for example $35/GJ

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Some business gas contract pricing includes:

Single rate: one rate for all usage
Block or tiered rates: different rates for different usage bands

3) Other items you may see

GST: typically added to the total for most businesses
Fees: late payment fees, special meter read fees, or other administration charges depending on the retailer
Capacity or demand-style charges: more common for larger sites and some network arrangements

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The practical takeaway is that comparing only the headline usage rate can be misleading. A slightly higher c/MJ price can still win if the supply charge is much lower, or if the tier structure suits your usage.

MJ vs GJ conversion for gas rates (quick reference)

Use these conversions to compare quotes quickly:

To convert $/GJ to c/MJ: divide by 10. Example: $40/GJ = 4.0 c/MJ
To convert c/MJ to $/GJ: multiply by 10. Example: 3.2 c/MJ = $32/GJ

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Why does dividing by 10 work? Because:

$1/GJ = $1 per 1,000 MJ = $0.001 per MJ = 0.1 c/MJ

Worked examples: How business gas contract pricing turns into a bill

The basic bill formula is:

Total (ex GST) = (Daily supply charge × Days) + (Usage × Usage rate)

Example 1: Quote in c/MJ

Billing period: 90 days
Supply charge: $1.10/day
Usage: 12,000 MJ
Usage rate: 3.8 c/MJ

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Calculation:

Supply component: 90 × $1.10 = $99.00
Usage component: 12,000 × $0.038 = $456.00
Total ex GST: $555.00
Total inc GST (10%): $610.50

Example 2: Quote in $/GJ (same economics)

Usage: 12,000 MJ = 12 GJ
Usage rate: 3.8 c/MJ = $38/GJ

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Calculation:

Supply: 90 × $1.10 = $99.00
Usage: 12 GJ × $38/GJ = $456.00
Total ex GST: $555.00

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Same total, just different units.

Example 3: When the “cheaper” rate is not cheaper

Two offers for the same site, same usage over 90 days (12,000 MJ):

Offer A: $0.85/day supply, 4.1 c/MJ
Offer B: $1.60/day supply, 3.7 c/MJ

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Offer A:

Supply: 90 × 0.85 = $76.50
Usage: 12,000 × 0.041 = $492.00
Total ex GST: $568.50

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Offer B:

Supply: 90 × 1.60 = $144.00
Usage: 12,000 × 0.037 = $444.00
Total ex GST: $588.00

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Even though Offer B has the lower usage rate, the higher supply charge makes it more expensive overall for this usage level.

What affects commercial gas pricing (Why rates differ business to business)

Business gas rates are shaped by a mix of wholesale, network and retail factors. The same retailer can legitimately quote two businesses different prices because of:

Annual consumption and load profile: higher and steadier usage can attract sharper unit rates
Location and gas distributor: network charges vary by state and distribution zone
Contract length: 12, 24 and 36 month terms price differently
Risk structure: fixed pricing vs contracts with pass-through components
Timing: wholesale market conditions when you request a quote

How to compare commercial gas pricing accurately

If you want an apples-to-apples comparison, use this checklist:

Convert all usage rates to the same unit, either c/MJ or $/GJ
Compare supply charges, not just usage rates
Check whether rates are single, tiered, or include seasonal blocks
Confirm what is included, and what is pass-through (if applicable)
Model the quotes against your real usage, ideally using a recent bill

Common questions about MJ vs GJ gas billing

Why do some bills show MJ and others show GJ?

It is mostly a quoting and presentation choice. Smaller retail market contracts often show c/MJ, while larger commercial offers commonly use $/GJ for simplicity at higher volumes. Both are energy units and convert directly.

Is gas ever billed in kWh for businesses?

In Australia, gas is usually billed in MJ or GJ. Some internal reporting tools convert gas to kWh for combined energy reporting, but your retailer invoice will generally stick with MJ or GJ.

Does converting MJ to GJ change what I pay?

No. It should not, provided the rate has been converted correctly. If the bill total changes after conversion, it is usually because the unit price conversion was done incorrectly, or the supply charge and tiers were not included.

Next step: Get a like-for-like comparison on your business gas bill

If you are reviewing a renewal or you have been offered new rates, the fastest way to sanity-check a quote is to run it against a recent invoice and confirm the unit conversion (MJ vs GJ) and the bill formula.

If you want help, Zembl can compare business gas plans from our retailer panel and explain the true total cost, not just the headline rate. Start here:

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Tip: When you send a bill for review, include the page showing your MJ usage and supply charge. That is all that is needed to compare pricing accurately.