Proposals to increase the fixed component of electricity network tariffs in Australia could have significant impacts on households, particularly those that have invested in energy efficiency upgrades, solar panels, or battery storage, as well as on low-consuming households. The Australian Energy Market Commission (AEMC) has proposed a major change to the structure of electricity network tariffs. Currently, most households pay a combination of a fixed daily charge and a usage-based (volumetric) charge, with network costs covering poles and wires making up around 39 percent of an average electricity bill. Under the new proposal, a larger share of these network costs would be recovered through fixed charges rather than based on consumption.
Analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) shows that this shift could raise bills for households that use less electricity while lowering costs for high-consuming households. This outcome could disproportionately affect low-income households, who generally consume less energy, and could weaken incentives for energy efficiency measures or renewable energy adoption. It could also significantly reduce the effectiveness of federal battery rebates.
IEEFA’s findings, outlined in the briefing note Network tariff shake-up could create more problems than it solves by Jay Gordon, Energy Finance Analyst, Australian Electricity, indicate that homes installing batteries under the federal rebate program could see electricity costs rise by $5,800 to $11,500 over the lifetime of the battery, far outweighing the $3,300 rebate provided. Higher fixed charges could also extend the payback periods for energy efficiency upgrades by up to 2.5 years, discouraging households from installing efficient appliances or rooftop solar.
IEEFA modelled the impact of a scenario where all network costs are recovered through fixed charges, distributed equally across customers, compared with current retail tariffs in the National Electricity Market as of February 2026. The analysis found that low- and median-consuming households could pay more, while high-consuming households could pay less. Under predominantly fixed network tariffs, most households would face higher fixed charges and lower per-kilowatt-hour rates, which could increase bills for below-average energy users. Energy efficiency savings would be reduced, and payback times for upgrading appliances could lengthen.
New, efficient all-electric homes without solar would generally face higher electricity bills, while homes with rooftop solar could see annual bill increases of $239 to $564. Battery and solar economics would be further weakened, with a household installing a 10 kWh battery in 2025 potentially paying $5,800 to $11,500 more over its lifetime. Combined 8 kW solar and 10 kWh battery systems could see payback periods extend by 1.2 to 4.4 years, potentially nullifying the benefits of government incentives. While lower per-kilowatt-hour charges make electrification of gas appliances slightly more attractive, the effect is minimal, reducing payback by less than a year for a typical home or less than 0.3 years for homes with rooftop solar.
Gordon noted that predominantly fixed network tariffs are a blunt instrument that could raise costs for low-consuming households, including low-income families and renters who cannot electrify, while diminishing incentives to reduce peak demand through solar, batteries, or energy efficiency measures. IEEFA argues that the proposal simply redistributes network costs without addressing fundamental questions about how costs and risks should be shared between consumers and networks.
Gordon recommends a first-principles review of electricity network economic regulation, highlighting that current regulations were designed before widespread rooftop solar and battery adoption. As more households generate and store their own energy, it is critical to reassess how costs and risks are allocated to ensure network services are delivered efficiently and consumer costs are minimized. The analysis underscores the importance of designing electricity tariffs that balance fairness, efficiency, and incentives, particularly as households increasingly participate in energy generation and storage while supporting the broader electricity system.
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