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 and basic service.
- Network charges — Distributed Network Service Provider (DNSP) costs to build, maintain and operate the poles, wires and substations.
- 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.”
About Michael Bloch
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Yes, if they kept raising the fixed fees, i would go off grid if i could to avoid them.
But I also realise they will still find a way to get their money out of me one way or another. As you say they will probably adopt the council habit of charging for the service if it is available, not if you use it.
Perhaps if they want to make things fairer, they should actually charge commercial customers the same price per kWh of power consumed that the average retail customers pays… that is the criminal aspect of how they charge for power that never gets mentioned…
I’d rather the poles and wires companies take a haircut or two.
Realtime energy monitoriing would be one very positive move and a bargain if the cost is 66c per year.
And yes, Enery Made Easy is anything but.
I agree. Time for certain corporate entities to stop milking the public. Energy Made Easy is certainly a misnomer. Situations like what we have now is a result of competition policy forced onto the states (but some willingly accepted it) by the federal government of the day in the late 1990s. Competition was supposed to lead to innovation and lowest prices as possible. We’ve seen how that’s worked with electricity, gas and water. Put a private CEO in charge of a public utility, and watch the costs go up.
I’ll make sure that I’m home when the smart meter arrives, so that I can make sure that I know what the installers are doing.
My last smart meter in SA was free.
When the private sparky fitted it the cable to the street was out of spec and he had to get a SAPN truck out. 8 hours later and dog knows how much, I had a new meter.
No wonder metering has been handballed to Retailers.
Hi Rod,
Retailers havethe responsibility but nobody in the electricity actually wants it.
I’m pretty sure they were/are compensated for taking on meters.
The ‘Residual’ portion of bills jumped by a significant amount in SA a few years back.
I can’t see any efficiency gains by giving meters to Retailers.
Hi Rod,
There’s argument that the entire retail segment is a waste of money.
When you think about the thousands of people in call centres and the hundreds of thousands of customers ringing them up, it’s a colossal waste of time just to create churn.
And it doesn’t make prices better unless you engage in the circus.
In Queensland the Poles and Wires company is government owned. Either they make money and return it to the Queensland taxpayer or they have to put money into it.
Efficiency / cost-effectiveness were never considerations. The only two factors in privatization were balancing the books after gross financial eneptitude, and removing accountability..
“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.”
Isn’t it just a flat daily rate in most cases, for consumers, no matter how much grid power they use? Isn’t that what ‘fixed charges’ means? Which would mean those with solar and batteries pay more, proportionally, for grid upkeep relative to actual use?
Sounds like another ‘EV tax’ thought bubble. Paint adopters of new tech as freeloaders in some way, to appease those on the old tech. The grid is a public resource, governments should pay for it, not consumers. Electricity should never have become a consumer product.
There is a fixed charge and a portion of the kWh is for poles and wires.
If you look up your distributor’s last 5 year plan they will have an amount per connection depending on your customer type and if you have ‘off peak’ etc.
100% correct Nick
There’s the daily supply charge and also the fixed network charge that is part of the usage charges charged from the DSNP.
I knew this would be coming next, charging households who even disconnect from thw grid just so the privatised network can continue to extract profit from people – disgusting.
Can you clarify “Supply charges” vs “Network charges”? I thought poles and wires were included in the supply charge. I have never seen a seperate Network charge on my bill.
It’s generally a component of the usage rates.
David
DNSP’s charge a supply charge which is a daily rate and then they charge network charges, which today, are usage based and form a percentage (significant) of you $ per kwh charges. There are also a bunch of government environmental certioficate costs that are also part of your usage costs today. Your retailer combines all of the usage rates and their own profit margin into a rounded up number representing all of these costs.
If you are part of the wholesale market using say, amber and or localvolts then all of those unique charges are clearly identified and visible to you.
Who would have found it surprising that if a great chunk of users suddenly have managed to duck all or nearly all of their usage charges that the various state governments suddenly need to revisit whether network costs should be a variable component of usage charges, as they were, or a new fixed daily rate….. as they inevitably will be…
Most poles and wires companies only put a small amount into poles and wires they’re too busy looking after shareholders !!
Electricity retailers have proven consistently that they NEVER have the best interests of consumers at heart ..their ONLY interest has always been maximum possible profitability.. Privatization was one of the most moronic ideas dreamed up by our elected representatives and despite the demented rants of those who claim Albo is personally responsible for escalating power prices, ALL political parties were and still are responsible for the problem due to obsession with minimizing their own accountability. Solar and batteries are the obvious remedy for political turpitude and consumers should not be penalized by imposition of fixed costs, feed-in charges etc
In NSW poles are wires are owned by independent owners. The deal limits them getting more. I do see a higher fixed charge coming. But a not for profit like amber who want to break even may help. Neg feedin will expand as more solar is produced. Many with solar will feel pain since they could pay to make power they dont use. That was the intention of the solar battery scheme.Timeshifting will be harder…but it still works.
Each day i believe i made the right choice to go solar+battery with a larger battery. The rip off energy companies will chase the last man standing. I am on grid but think of it like off grid. I dont want to be off grid. I make $$$ from surplus power. It pays for my limited purchased power if i ever need it plus supply charges. Average $3 a day. Sure summer if far higher. At present after supply charges its a profit of $2. With amber energy connecting us i hope this rises by a factor of 2 or 3.
I pity the mug who doesnt have a battery. Or somone with just solar
I’m a bit mug without a battery with solar and my provider owes me 430$ . I have hot water free with solar and do most things when the suns out and use bugger all from the grid and hunt around for my best deal !! Everyone to their own eh !! Good on ya mate 👍
I dearly hope that “supporting consumers’ ability to make use of the network through the removal of unnecessary signals” includes dropping demand charges from 3pm. The wholesale price is regularly negative well into the so-called ‘demand window’. High demand, my butt, it’s price-gouging!
In my area, getting caught topping up your battery just once in a month between 3:00 and 3:30 at 10kW will cost you ~$120.
But it’s the best time to charge if solar doesn’t do the job that day and the actual demand / price peak will be worth selling in to.
Plus you say they’ll want to charge me more even though the majority of my connection is for duck-flattening, demand-smoothing evening battery exports and a little arbitrage.
Hi Michael, hope the new year is good to you all. After reading your latest missive I recalled that you previously mentioned that and I quote now
“but the grid is quieter, stronger, better quality and 99.998% reliable by law.”
I was moved to look at the last 5 years of power outages as our system was turned on a couple of days after the New Year.
Total outages amount to 2 days and 10 hours give or take for the 5 year period. This amounts to 99.86%.
My question is what redress is available and from whom for what would seem to be a clear issue of non compliance?
I guess you could say it is trivial but there were over 100 separate events included in the period.
We are on the fortunate position of having a substantial battery backup system but our neighbours continue to suffer premature failure of electrical appliances in silence.
I just want to try to get some redress for them if possible.
Ian
Hi Ian,
The 99.998% figure comes from the Australian Energy Regulator I think.
They set the rules which the local poles & wires people (DNSP) must adhere to.
I’ve seen first hand when the DNSP automatically sends out cheques as compensation for outages longer than XX hours.
Perhaps contact the DNSP involved & see what their policy is.
And if they fob you off, let us know because they’ll likely take it more seriously if the bombs are thrown from here.
Cheers
As David Morgan asks, what’s the difference between network charges & supply charges? Isn’t the former just a subset of the latter daily fee?
Yes, the off-grid rationale is obvious – higher network charges means better off-grid ROI. When does off grid become more cost effective than staying on grid? That will depend on the individual household, & costs involved.
I don’t see people saying sod the grid, but perhaps I exist in a different social circle? If off-grid is better value for money, then why not do it?
Yes, electricity could evolve into something more akin to water & sewerage, but it would be complicated. Water has a single government owned supplier, whereas electricity is split between corporate retailers, & distributors that are often state owned enterprises. Would distributors become ‘retailers’ if off-grid households were to be charged?
Why not move to a state utility model where taxes etc fund the required infrastructure & service rather than rely on customer fees?
State-funded infrastructure?
Geez John, have you switched teams for 2026? You’ll be quoting The Guardian next…
Cheers.
Hi Glen,
I’m glad somebody else noticed but I’m not sure how to do a welfare check.
Perhaps we should just ask;
Where is John and what have you done to him?
😉
Where does the notion of state funded infrastructure require team changing? Remember, Dutton ran on a policy of state (federal) funded nuclear power plants, and I believe One Nation advocate state funded coal plants – don’t quote me on that last though. The reality is certain infrastructure is monopolistic and thus not fit to be run as private enterprise.
No, quoting the Guardian is about as likely as me favourably quoting Marx or Mein Kampf.
Hi John,
At least we’re all on the same page as the ACCC about infratructure for public good.
The thing about steam engines in the digital age, you either need volunteers to run them as a heritage tourist operation, or you need massive public subsidy.
Nobody is building nuclear or coal fired steam plants unless they get a guarantee of public money.
Problem is that when the “alternative government” is spruiking & using bent modelling to justify it, it creates doubt.
Doubt scares corporations who want certainty for long term investments, hence LNP culture wars have stifled energy investment for the 9 years they were in power plus years before.
The only thing they built was KurriKurri. Years late & so remote from the gas main they had to build a massive pipe field as gas storage: so it can run for 10hrs straight before needing a refill.
Total farce but when SnowyHydro buys the project from a major LNP donor…
It likely depends on the state you’re in, and your own partisanship, as to whom gets credit for what.
The LNP get a lot of credit for building and future proofing QLD whereas Labor get the ‘credit’ for selling everything off and breaking the state. To be fair most of that LNP credit is legacy e.g. Sir Joh and the … Country Party? I probably have that wrong, but an LNP predecessor.
In the NT you have the Country Liberal Party, but the rest of the states, and surprisingly the ACT, do have Liberal parties and\or governments.
Federally of course the Howard era remains the Golden Age for most living Australians, with Menzies for a few others.
KurriKurri – you mean Snowy Hydro Hunter Gas Power Station?
Doubt has been caused by Green-Teal-Labor opposition to anything other than wind+solar. Turnabout is fair play – why should the Coalition support corporations investing in batteries, solar, or wind?
It seems like nobody is building much without guaranteed public money. these days.
Hi John,
I can’t say I’m very familiar with Pig Iron Bob, other than to note it’s hard not to be re-elected in a booming post war economy.
He did commit Australia to the farce that was the Vietnam war.
However I’ve seen footage of his fawning fealty to the Queen and thought it was sickening.
And of course he was a staunch supporter of “White Australia” so it was no golden age if you were in any way brown skinned.
So on balance he’s a bloke on the wrong side of history, but at least he treated “conservative” as a dirty word; and knew when to leave.
Howard had a thoroughly drserved send off as the only PM in the last hundred years to be unseated.
Howard did immense damage we are still paying for.
John Alba:- “Why not move to a state utility model…?”
John, do you mean something like the Electricity Commission of New South Wales (ECNSW)?
ECNSW, or “Elcom,” was the state’s statutory authority from 1950 to 1995, managing bulk electricity generation and transmission to end post-war blackouts, taking over from various authorities and becoming Australia’s largest generator.
From the early-1990s through to the mid-2010s, a succession of NSW state governments, both Labor and Coalition, then progressively deregulated, split off and sold various state assets, purportedly to promote competition, customer choice and potentially cheaper electricity.
https://en.wikipedia.org/wiki/Electricity_Commission_of_New_South_Wales
Déjà vu! (French for “already seen”)
Is it not inevitable, that as consumers morph into prosumers, usage expenditure falls, so fixed cost becomes a higher proportion of total cost? But the only plausible causes for *increasing* the fixed cost are network upgrades & inflation, I figure.
But grid upgrade cost should be a usage impost, because it is primarily required for large producers, solar and wind farms, not rooftop solar. Feed-in is in general consumed locally, at least regionally, I’m willing to guess. After all, it is throttled if it starts to roam too much. That leaves grid maintenance, not upgrades, as a legitimate fixed cost.
But impotent rats and mice serve the needs and wishes of the big players who own the game board, so rationality isn’t always relevant. Price tends to be what the market (and regulators) will bear. Threat of exodus might be better than the expense of actuality.
Yes a percentage have morphed into prosumers, but that’s limited – apartment complexes simply aren’t suited for individual ‘homeowners’ to own solar systems. Likewise some businesses with their own buildings will be able to cover their roof with panels to generate power, but this is far from all, perhaps not even most. Thus retailers have a captive market and can simply increase usage fees to ensure revenue streams don’t reduce, unless government prohibits them from breaking even etc.
Increasing the connection fee component spreads the load, sure, but it also hurts those who use the least power, or can least afford power prices. It shifts from a user pays model to a tax on existence, which promotes off-grid alternatives.
Charging solar farms and wind farms for the miles of extra powerlines they need is fair, but that’ll only affect those who don’t impose themselves on farming communities and the like.
I plan to contact my solar installer once they reopen to check about off-grid etc.
Anyone with my degree of contempt for officialdom / power barons doesn’t need to think about going offgrid .. its like a kneejerk reaction and cost-effectiveness is a minor consideration.
Raising fixed network charges may stabilise short-term revenue, but it weakens marginal price signals, accelerates selective grid defection, and increases long-term system fragility. Beyond a certain threshold, off-grid or near-off-grid operation becomes economically rational for households with capital, leaving higher costs concentrated on those without choice. That is the textbook definition of a utility death spiral.
The mechanism is economic, not ideological.
The AEMC is trading long-term adaptability for short-term revenue stability.
This will not “save” the grid. It will entrench inequity and delay necessary restructuring.
I think you missed the part of the story where they are thinking of doing the same as councils… you pay for the rubbish truck to drive past your property, having done so it’ll take your rubbish for free. If the poles and wires go past your place you’ll.pay for them whether connected or not. In that case to not be connected simply makes no sense fiscally or logically
Andy
Rubbish has a single provider. Which single entity provides your electricity? Distributors would need to become retailers to charge households which aren’t charged by existing retailers.
The fact that there are a hundred who call themselves retailers is irrelevant every single one of them has to include the DNSP costs into their costing structure. If the rules change so that the DNSP must be paid for the wires that run past the property, and the DNSP is the state government in all but name, then the legislation required to enact that change willappear even more rapidly than the bill… dont forget that under existing legislation if you have no retailer because you never chose one, then the DNSP will step in as the retailer with a default offer rhat makes rape and pillage look tame.. interfere with a state governments revenue raising at your peril!!
Personally the ‘up yours’ factor is worth a lot to me. I refuse to be held to ransom by bloodsuckers for at least three outages per week. Cost is only one consideration
This is inevitable, the network charges that are built into our usage charges (as distinct from the daily supply charges) increasingly burden those without solar and batteries with a greater share of the cost of maintaining the network than those of us that can afford CERs.
My grid dropped to around 10kWh/day when I put in solar and 2kWh/day since I’ve added batteries.
So my contribution to upkeep of the network has become very minimal. Shifting the burden to my neighbours who don’t have solar.
There will be much gnashing of teeth, but moving the network charges further away from usage, is reasonable to me.
There are two houses on my immediate right that don’t have solar panels.
The house right next door was a new build with south facing roofs (which could just as easily have been north facing).
Next house along has huge tracts of north facing roof and would be perfect.
If neither of them are interested in getting solar then what level of care should I have for any financial burden they have?
The owners may well be NoNotion / SkyNews / fossil fuel addict climate change denialists sending you a message that they want nothing to do with nett zero. I once thought thatvthis kind would see the error of their ways however the number if seppo’s still supporting the orange baboon suggests that chronic stupidity can’t be cured.
Out of interest I found a list of all the DNSP’s in Australia and then googled who owned them. In the main the various state governments own the DNSP’s with NSW and ACT having sold about 50% of the city based DNSP’s into private ownership, where they are publicly traded companies or owned by Super/Pension funds. SA and VIC obviously needed more cash and sold most/all of there DNSP’s (but presumably still hold some form of hammer of control) and the remain are corporations solely owned by state governments and under the control of the various energy ministers.
The comments by others suggesting they are a bunch of blood sucking profit leaches on society may be just a tad off the mark…… For much of the country they are a form of hidden government taxation on the most of us. Perhaps that is not at all surprising. Equally perhaps given the enormous success of cheaper home battery’s the fact that the total network cost has to be restructured shouldn’t be a surprise to us all.
ToU Network charges and Usage charges were always designed with the primary aim of gouging customers when they were least able to avoid being gouged with the plausible deniability that it was there to reduce peak demand. I never found enough consumption to shift from peak to off-peak to make ToU more economical than a flat rate before I had solar panels.
With solar panels (but no battery), ToU makes no sense whatsoever as you won’t use their cheap power off peak – you’ll use your panels. Then pay through the nose for the peak after making off-peak power cheap for everyone else.
Now that batteries ARE reducing the peak, they’re looking to replace their revenue
Here in Victoria I have one supply line and 2 meters. goes to shed then splits to house, I pay 2 supply charges from 2 different retailers. Im quite happy to do this at current rates, I wouldnt want supply charges to increase further however as they are already charging me twice, fair go.
I’ve only had solar for a few years and noticed each year they seem to come up with a new way to get my money. My FIT has gone from 10c to 7.6c, and now to 4c.
After one year they removed any access to flat rates, & I was only able to access plans with high rates after 4pm or so. I guess this was designed to hit people with solar as the sun goes down.
When this didn’t work well due to my battery, they removed these plans, & I could only access demand-based charging, where one evening on a super cloudy day where I used electricity during the “demand” period resulted in a penalty for each day of the entire month.
I added a second battery, so now never get any demand charges and began wondering what their next step would be.
Another example of how well privatisation works for the general public. Providers like Ausgrid have been allowed to ignore the network for decades while giving shareholders hundreds of millions in profits & now cry poor so they can screw us even harder
EXACTLY!
Hi Anthony
Totally agree.
The fantasy of competition among Retailers bringing down prices was always a joke.
As you say, back offices, advertising, customer churn, Executives all have to paid for by consumers.
The retail portion is now up to 20% of bills I think.
*Sorry for replying here. There was no option to reply to your comment directly, strangely.
Isn’t it strange that the government mantra of “user pays” since the days of Keating, suddenly changes to “all must pay their fair share” when the mug punter finds a way of reducing their usage…
Hi Andrew,
To be fair I think Keating incentivised/blackmailed states into setting up the NEM.
However the actual nuts & bolts of the market structure was arranged by John Howard, with regulators & rule setters staffed by people inside the existing industry.
Funnily enough the system seems to favour the incumbents more than it does consumers.
Anthony, I was actually referring to the Himler report and the resulting national competition policy, courtesy of Keating – I didn’t know he had a part in setting up the NEM as well – probably under the same umbrella.
He really is the gift that keeps on giving !.
Yeah AFAIK it was Keating that came up with the idea of the NEM but Howard’s implementation was less than stellar.
The whole thing wants to be nationalised, along with electrical licencing & 17 different DNSP technical standards.
That would boost productivity no end.
(At least we don’t take 3 to 6 months just to permit a domestic solar install for 6x the cost, like the US presently)