Electricity Bills: Higher Fixed Network Charges Ahead?

The Australian Energy Market Commission (AEMC) recently published its draft recommendations for a “smarter, fairer, lowest overall cost” electricity network, one that may involve higher fixed network charges.

What Are The AEMC’s Draft Recommendations?

The AEMC has proposed six recommendations it envisions will result in a “dynamic energy services market” delivering value, choice, lowest overall cost and targeted consumer protections.

The recommendations summarised:

• Require energy providers to charge all customers on the same plan, the same prices. This is to tackle the ‘loyalty tax‘ issue and to ensure the customer always has the best deal.
• Introduction of a competitive franchise for customers who haven’t chosen a market offer.
• Periodical review of regulations to ensure they are achieving good outcomes.
• An upgrade to the Energy Made Easy website to make it, well, easier to use and compatible with new and emerging types of energy plans.
• Focus network tariff design on efficiency, and a “fairer sharing” of costs among consumers.

Where Do Potentially Higher Fixed Network Charges Fit In?

Electricity bills are made up of several components:

• Charges for electricity consumed
• Supply charges – a daily fee for being connected
• Network charges (poles/wires)
• Retail/admin fees
• Environmental/other fees

Network charges usually make up about 30% of a power bill, although Energy Consumers Australia says they can be up to 50%. At either level, they are substantial and may increase as higher fixed network charges are part of the AEMC’s considerations for “fairer sharing” of costs among consumers.

Current arrangements see the fixed charge component of network tariffs charged to customers based on how much electricity they consume. So, households with rooftop solar and a battery contribute less to sunk network costs than customers who only use mains grid electricity; yet both depend on the network.

Commenting generally on the “fairer sharing” aspect, the AEMC stated in its press release:

“Where electricity once flowed in one direction, it now flows in two. Our reforms would ensure everyone who relies on the grid contributes fairly to maintaining it, while creating strong rewards for behaviours that genuinely help the system, for example, storing solar in batteries and using it during evening peaks.”

But the announcement doesn’t mention the potentially higher fixed network charge idea, nor does the infosheet summary. You’ll need to dive into the guts of the report.

In a public forum held on December 15 regarding the report (summary here), the question was asked:

“How does the move to more fixed charges in the long -term interest of consumers?”

The AEMC believes it will help address current issues such as consumers being encouraged to shift costs between those who can and can’t afford Consumer Energy Resources (“CER” — such as solar power systems) and to respond to network signals.

The Commission is also of the view it will improve network utilisation by supporting consumers’ ability to make use of the network through the removal of unnecessary signals. And it will provider clearer signals of the value of CER for Australians making long term purchase decisions, such as for home battery systems.

“Bugger The Grid”

The screams of “I’m going off-grid” can be heard already. And driving people from mains grid connection takes away the benefits of the consumer energy resources they have installed from it.

Avoiding higher fixed network charges and electricity bills altogether by going off-grid assumes the “everyone who relies on the grid contributes fairly to maintaining it” approach is maintained.

But could it also evolve into something like the situation with mains water? If water infrastructure to a site in place, fixed water service and sewerage charges must be paid even if you only use rainwater. But this is just me throwing out a “what if” scenario not based on anything I’ve read or heard.

The AEMC is now seeking feedback on the draft report, which must be lodged with the Commission by 13 February 2026. After consideration of feedback, the AEMC will publish its final recommendations in Q2 2026. For more information, the project page is here.

Smart Meter Rollout Update

On 18 December, the AEMC announced a final rule that all new smart meters installed from 30 November 2028 will have the capability to wirelessly communicate real-time data and customers with these meters will have the right to access their data, free of charge.

However, where a smart meter has already been installed prior to the end of November 2028, those customers will need to pay their retailer a “reasonable” charge to upgrade their meter to receive the same benefit, or install an alternative device.

And as for “free”, further on in the announcement it states:

“These costs will form part of a regular electricity bill, similar to how consumers are already charged for other metering services.”

Free lunches and all that. But the cost is minimal; approximately $0.66 per meter, per year.

Commenting on the rule change, AEMC Chair Anna Collyer said:

“Future-proofing household smart meters with real-time communications functionality will set a stake in the ground, a signal to innovators about the kinds of technologies and services they should design.”