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Major changes to power bills threaten to leave low-income households worse off by $200 a year and those with solar and batteries $700 out of pocket, while wealthy families who use the most energy benefit by as much as $1400.
Energy experts and clean-energy advocates have criticised an Australian Energy Market Commission proposal to change the way costs for maintaining the electricity networks are passed on.
Network charges to pay for the poles and wires make up close to 50 per cent of average household power bills, on top of the cost of electricity supply.
The network costs are charged mainly at a variable rate based on the amount of power and time of day electricity is consumed.
However, the commission is grappling with a monumental shake-up of the energy grid due to renewable energy, with 4.3 million solar-powered homes dramatically cutting their electricity use and their bills, and is scrambling to find ways to pay for the grid upkeep.
In response to these challenges, the commission issued its Electricity pricing for a consumer-driven future report, which recommends variable charges be switched to a fixed daily connection charge. The recommendation is out for public consultation.
Experts said adopting fixed charges would result in lower costs for large-energy users and higher costs for low-energy users, such as pensioners, low-income households and those with rooftop panels and batteries.
Research outfit Green Energy Markets had calculated the impacts of this change and found that energy misers would be hit hard, the firm’s analysis and advisory director, Tristan Edis, said.
“A household that already owns a typical size solar and battery system would see their electricity bill increase by around $400 to $700 per annum as a result of the AEMC’s proposal,” Edis said.
“It is also very bad for low-income households, given they tend to consume less electricity than the average. I estimate they will be between around $100 to $200 per annum worse off.”
The federal government offers generous rebates to install residential batteries, in a move to boost uptake and reduce strain on the grid. Australian households bought 183,000 battery units in the second half of last year – four times more than during the same period in 2024.
Sydney resident Jane Fisher, 84, installed solar panels on her Newtown home to lower her power bill in retirement and enable her to use reverse-cycle air-conditioning to heat and cool the house for herself and her grandson.
She said a rise in network costs on her bill would deter her installing a battery.
“It was obvious that once more and more people got solar, that there was going to be less and less people paying for electricity, so these changes weren’t a shot out of the blue for me,” Fisher said. “But it will be a disincentive for me and other people putting on solar and batteries.”
A spokesperson for the commission said it was seeking public feedback on its proposal, which was a response to rapidly changing energy usage and would create a more equitable sharing of costs.
“The [commission’s] draft report, published in December, proposes modernising the network tariff framework so that it supports lower overall system costs, improves the way costs are shared and therefore contributes to better outcomes for consumers.”
Community-based lobby group Solar Citizens warned the move to fixed charges would undermine the financial benefit of adopting solar and batteries and discourage more people from installing them.
“Adopting this recommendation would punish most energy users by raising fixed charges,” chief executive Lee Douglas said.
“The biggest losers will be solar and battery owners and those who consume the lowest amount of energy – including energy-efficient households, single-person households, apartment residents, and people doing their best to keep their energy bills low because of cost-of-living pressures.”
Energy Minister Chris Bowen said he had instructed market regulators that all changes must deliver cheaper bills.
“I would encourage organisations to put forward their views and ideas in the consultation process to ensure the review is developed in the best interests of consumers,” Bowen said.
The Smart Energy Council’s David McElrea said the change would remove the benefits people gained from investing many thousands installing solar panels and batteries.
“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.”
Submissions close on February 13.
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Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.Connect via email.From our partners
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