The Australian Energy Market Commission (AEMC) has released a Draft Report proposing a major change to how electricity network charges are recovered from households.
The proposal would shift network pricing away from charges that vary based on how much electricity households use and when they use it, toward a model where a much larger share of network costs are recovered through fixed, unavoidable daily charges.
While some dynamic elements may remain, the clear direction of the Draft Report is toward predominantly fixed network tariffs, with variable charges playing a much smaller role in household bills.
This is a proposal the Smart Energy Council strongly opposes.
Smart Energy Council Chief Advocacy Officer David McElrea said the proposal would have serious and far-reaching consequences for households, equity and Australia’s clean energy industry.
“This is a proposal the Smart Energy Council strongly opposes. A move to predominantly fixed network charges would strip away much of the financial benefit households have gained by investing in solar and batteries,” he said.
“Households that have taken action to reduce their energy costs and emissions would see those efforts devalued, as a far greater share of their electricity bill would no longer respond to how or when they use electricity.”
Why this matters
Network charges can make up to 50% of residential electricity bills. How these charges are structured has a direct impact on:
- household energy bills and bill control
- incentives to invest in solar, batteries and energy efficiency
- equity outcomes for low-consumption and lower-income households
- the viability of Australia’s distributed energy sector
Once fixed charges are increased, households cannot avoid them through efficiency, demand shifting, or investment in clean energy technologies.
Impacts on solar and battery economics
Analysis undertaken by Green Energy Markets shows the proposal would significantly undermine the economics of household solar and battery systems.
Key findings include:
- Existing solar and battery households would see electricity bills increase by around $400 to $680 per year compared with current default time-of-use tariffs.
- For households considering installing solar and batteries, the annual bill savings those systems could push the payback period beyond 10 years.
- The reduction in savings would materially extend payback periods, in many cases beyond typical battery warranty periods, sharply reducing the financial case for investment.
This would significantly weaken household incentives to adopt solar and batteries and risks a major slowdown in deployment.
Equity impacts
Predominantly fixed network charges are regressive.
Low-consumption households already use less electricity, often because of constrained incomes, smaller dwellings, or limited appliance stock. Fixed charges represent a larger share of their total bill, meaning these households would pay more regardless of their ability to respond.
Modelling shows low-consumption and lower-income households are consistently worse off under a fixed-charge-dominant model, while high-consumption households benefit.
These impacts are structural and ongoing, not transitional.
Why this is a process and evidence concern
This is a self-initiated review by the AEMC, yet the most consequential proposal — a shift toward predominantly fixed network charges — was not referred to the Stakeholder Reference Group and is not supported by published bill modelling or real-world evidence.
Given the scale of the impacts on households, equity and investment signals, this proposal warrants a far higher evidentiary threshold than is currently demonstrated in the Draft Report.
International context
Internationally, regulators are moving in the opposite direction — seeking to preserve bill control, equity and incentives for flexibility by limiting unavoidable fixed charges and strengthening usage-based pricing.
Australia risks taking a backward step that undermines consumer trust and clean energy investment.
MEMBER SUBMISSION REFERENCE GUIDE
What to say in your submission – link here.
What you say is of course up to you. However we have included some points below which you might find useful when preparing your submission. Obviously please feel free to use your own words and put everything in your own way, this is just intended to serve as a guide.
You do not need to write a long or technical submission. Short, clear submissions are effective.
1. Oppose predominantly fixed network charges
State clearly that you oppose any move toward predominantly fixed network charges and that network pricing should continue to reflect consumption and time-of-use.
Example language:
I oppose the AEMC’s proposal to shift network pricing toward predominantly fixed charges. Fixed, unavoidable charges reduce bill control, undermine equity and weaken incentives for efficient energy use and investment in distributed energy resources.
2. Highlight impacts on solar and battery investment
Explain that fixed charges undermine the economics of solar and batteries and threaten industry viability. This means less uptake of solar and batteries which threatens Australia’s renewable energy target and emissions reduction goals.
Example language:
Modelling shows that households with existing solar and battery systems would see bills increase for those who already have solar and batteries, while households considering installation would see benefits substantially reduced. This would significantly weaken investment signals and risk a sharp decline in uptake.
3. Raise equity and affordability concerns
Emphasise that fixed charges are regressive and disproportionately harm low-consumption and lower-income households.
Example language:
Predominantly fixed network charges are regressive. Low-consumption and lower-income households would pay more regardless of their ability to reduce usage, entrenching structural inequities rather than addressing them.
4. Call out the lack of evidence
- Point out the absence of published bill modelling and real-world evidence supporting this approach.
Example language:
Given this is a self-initiated review, the AEMC should not progress such a fundamental change without publishing detailed bill impacts, distributional analysis and evidence of consumer and retailer behaviour.
5. Ask the AEMC to stop this proposal
Be explicit about the outcome you want.
Example language:
I urge the AEMC not to progress the proposal to introduce predominantly fixed network charges and to retain pricing structures that preserve consumer agency, equity and clean energy investment incentives.
Practical tips
Submit by the consultation deadline listed on the AEMC website.
Media contact: Tim Lamacraft – tim@smartenergy.org.au – 0448 972 192
Keep your submission concise (1–2 pages is sufficient).
Focus on real-world impacts for households, businesses and investment.
Use your own experience where relevant – practical examples matter.
