The Australian Energy Market Commission (AEMC) says its latest network pricing reforms could cut electricity costs and deliver up to $6 billion in savings across 15 years — but modelling suggests those savings won’t be shared evenly, with some solar owners potentially worse off.
Will AEMC’s Network Pricing Reforms Save Money?
The modelling projects savings of $40 to $80 per household per year on electricity bills by 2040. It estimates some families would be much better off, saving up to $740 a year by 2040, with two-thirds of households that are unable to have solar or batteries benefiting.
The impact is slightly negative however for solar and battery owners. The payback period for solar extends from approximately 4.4 to 4.7 years, while solar and batteries go from 4.6 to 5.0 years, although home batteries could be better rewarded for easing network pressure during peak periods.
Quitting gas would become more financially enticing, with payback from going all-electric improving from 8.3 to 7.7 years.
This follows earlier SolarQuotes coverage of the draft proposals, which raised concerns about higher fixed charges and shifting costs onto low-usage and solar households. The latest release doesn’t change that direction — but it does add further modelling and proposed consumer protections.
Is This Really About Savings — Or Cost Shifting?
AEMC projections for potential changes that would see fixed charges go up and usage costs go down.
Dig into the detail of the report and the focus is less about cutting bills across the board, and more about reshaping who pays what under the AEMC’s so-called “cost-reflective” pricing approach.
The AEMC also links the reforms to broader benefits, including lower wholesale costs, improved energy security and reduced emissions, although these outcomes are not directly evidenced in the pricing modelling.
Electricity networks still need to pay for poles and wires regardless of how much energy flows through them. As households install solar and reduce grid consumption, recovering those costs through usage alone becomes more difficult.
The solution being proposed is not to reduce those costs, but to recover more of them in ways that are less dependent on how much electricity is used. That’s why fixed charges remain central to the discussion — even if they are not the headline focus.
What Role Does Peak Pricing Actually Play?
A big part of the AEMC’s case relies on higher prices when electricity is used during peak demand, and lower prices when the grid is underused. But that element is more prominent in the modelling than in the media release itself.
In practice, the reform depends on households responding to these price differences. Those who can shift usage, store energy, or avoid peak periods may benefit. Those who can’t are more exposed — particularly if a larger share of their bill is fixed.
What This Means For Solar And Electrification
This is where the tension becomes harder to ignore.
For years, households have been encouraged to install solar, electrify appliances, and reduce reliance on fossil fuels. Those decisions were supported by clear financial signals — use less grid power, and your bill goes down.
This reform starts to change that relationship.
As more costs move into fixed charges, reducing grid consumption delivers smaller savings. At the same time, more complex pricing makes outcomes depend more on behaviour, flexibility, and access to technology like batteries.
The AEMC argues this supports electrification overall — and at a system level, that may be true. But at a household level, the incentives become less straightforward.
Winners, Losers, And Acknowledged Risks
The modelling confirms that not everyone benefits.
Some households — particularly those with flexibility, storage, or the ability to shift usage — are better placed to respond to changing price structures.
Others, including low-usage households and some solar-only homes, may face higher costs depending on how tariffs are designed and implemented.
The Australian Energy Market Commission acknowledges these distributional impacts. A separate report by HoustonKemp examines the likely impacts in more detail and sets out options to manage them, rather than challenging the direction of change itself.
Those options include limiting how quickly fixed charges can rise, changing how network costs are shared between different types of customers, and requiring retailers to offer clearer choices and obtain customer consent before moving people onto different tariff structures.
These measures are aimed at managing the transition and reducing the risk of sudden bill increases as reforms are introduced.
Not Final, But The Direction Is Clear
The AEMC has not yet made final recommendations, with more than 2,700 submissions received ahead of a final report due in June 2026.
Even so, the direction of reform is becoming clearer. It points toward more complex pricing structures, a stronger reliance on fixed cost recovery, and a greater focus on how households use electricity — not just how much.
For solar households, savings are becoming more dependent on tariff structure and usage timing, along with how much energy is generated.
The impact of these changes will become clearer as the reforms are finalised and rolled out over the coming years.
To stay up to date on AEMC’s finalised changes once they are announced and other home electrification news, subscribe to SolarQuotes’ free weekly newsletter.
About Kim Wainwright
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The AEMC’s role isn’t just to balance industry and consumer interests, it also has to consider long‑term environmental outcomes where they affect consumers. That’s why the shift toward higher fixed charges matters.
By reducing the financial reward for lowering grid consumption, these reforms weaken one of the clearest efficiency signals households have. The AEMC links the changes to lower emissions, but the modelling in this report doesn’t actually demonstrate that.
In a transition period where demand reduction and efficient use still play a major role, it feels early to dilute those signals. The risk is that overall consumption rises, which cuts against the environmental outcomes the AEMC is meant to consider.
So from FY2030 there will be less incentive to go solar, solar / battery, EVs heading the same way with de-incentivisation.
Bad luck for those who invested, or planning to invest.
What is with this chart $200 per year fixed charge (daily supply charge) ?
That’s 54-55c per day ?
I take it this was from the suggested reform info ?
SA is fairly cheap for DSC at about $1.10 inc gst (unlike the highest tariffs in Oz at 54c peak).
So we now pay over $400 for the DSC a year.
I know some states are up around high $1 something, even $2 a day, they will feel it too, just a little less sting and lower tariffs helping now.
These are the proposed rate changes for the financial year 2026 for Regional Queensland [QCA Recommendation]. I have added GST where applicable to the pricing.
2025/26 24 Hr Demand [current]:
Tariff T11 $0.32970 FIT $0.08660 Daily Fee $1.68840
2026/27 24 Hr Demand:
Tariff T11 $0.28278 FIT $0.06153 Daily Fee $1.71709
My 10.03 kW system, coupled with a 13.6 kWh battery, does not support an excess over consumption of 28 kWh [to offset the daily fixed fee]. But the good news is that I have no measurable 5 kW in the mement throttling [export curtailment].
To produce 30 kWh per day, I would have to increase my system size by 8 kW. The only option is to move to 3-phase, but since I do not have 3-phase power available at the house, this is not an option.
My back-of-the-envelope calculation for the loss of revenue to cover Transmission and Distribution costs, and other costs attributable to behind-the-meter production, is about $476.19 per household with solar.
Honestly, it looks like i was very naïve when i installed my solar and battery, believing the hype that it was going to let me avoid the exorbitant amount being charged by the power companies.
I should have realised it would just mean they would find new ways to bend us over.
If i had my time over, would i install solar now? With the current pricing signals probably not.
If the numbers added up, perhaps a battery only to suck up free power in the middle of the day, but I don’t think solar stacks up now with this new information.
Andrew,
Skipping domestic solar increasingly becomes an environmentally responsible strategy, with zero effect on net emissions, as coal goes extinct, and all grid energy is renewable. And solar and wind farms need customers. Prosumers and their batteries were a way to shift the cost of the transition, but won’t be needed in due course. So the goalposts shift.
But the pricing shift from consumption to an emphasis on grid maintenance is also simple physics. When the fuel is free, all costs are capex plus maintenance, as other opex is largely nonexistent. A pricing shift is rational, but still needs a consumption element to fund extra generation for increased demand over time.
What would be enlightening would be to compare total grid income from the higher connection fee, with actual grid maintenance expenditure. That would reveal how shifty the move is in reality.
It’s all still cheaper than full-capability off-grid, I figure, looking at my investment for that caper.
The last word will rest with Minster Bowen who did pass some comments in the media when the AEMO proposal was publicised. He hasn’t rubber stamped the proposal and hopefully won’t.
I can see the logic in the proposed direction of a two component cost for electrical supply charges.
1. The variable cost of electricity which is the cost to produce the electrons.
2. The fixed cost of the transmission network to move the electrons from the generation source to the end user.
What is not included in the modelling is what makes up the fixed cost. This needs to be defined very clearly and as of yet is not being addressed.
The second component of the fixed cost is how to spread this fixed cost across the entire gambit of electricity users. The transmission system is designed to carry the highest peak load demand at any given point in time, namely Summer on a hot day and evening.
I would put forward that the fixed cost is charged to the end user based their peak demand in a day. A system for charging on daily peak demand can be seen a number of time of day metering tariffs. This will allocate fixed costs far more efficiently than that which AMEC is proposing.