New modelling released today by the Australian Energy Market Commission shows that reforming how electricity network costs are recovered could deliver up to $6 billion in savings over the next 15 years, reducing bills for households and small businesses across Australia.

The modelling shows reforms would lower costs for most households - with or without solar or batteries - and some families could save up to $740 a year on their electricity bills annually by 2040.  

Around two-thirds of households who are currently unable to have solar or batteries are projected to be better off.

The modelling assumes a scenario in which retailers take no other action and directly pass network costs onto consumers, and there are no other consumer protections applied.  

Publishing this analysis now allows time to consider targeted consumer protections and for retailers to work with networks to design new products and services for customers. Where consumers may face higher bills, independent analysis from HoustonKemp Economists, commissioned by the AEMC, sets out a range of practical options to protect them.

The AEMC has not yet reached final recommendations - all findings will be considered alongside the more than 2,700 submissions received before the Final Report is published in June 2026. This analysis covers the distributional impacts of one of six draft recommendations from the December 2025 Draft Report.

AEMC Chair Anna Collyer said the analysis reflected how the energy system had changed, and why pricing needed to catch up.

"Australia's energy system has changed dramatically over the past decade. Consumers are now generators, sending power back to the grid from solar panels and batteries, and the way we charge for the network needs to keep pace with that change,” Ms Collyer said.

“This analysis shows what is possible if we get the settings right: a cheaper, more efficient grid that delivers up to $6 billion in savings for all consumers,  better rewards for those investing in solar and batteries, and a fairer share of costs for those who cannot."

About this analysis

The figures are based on cautious assumptions - deliberately so, in order to identify where protections may be needed.  

They assume retailers pass costs directly to consumers with no additional protections in place, and that uptake of gas switching and EV adoption remains the same as under current arrangements, meaning the full benefits of reform-driven electrification are not captured.

"This is the most empirically grounded analysis of network tariff reform we have published. It draws on over 400 million real data points from households across ten distribution networks - not assumptions, but actual consumption patterns from actual customers over a full year," Ms Collyer said.  

Key findings

The reforms could deliver up to $6 billion in cumulative network savings over 15 years. By 2040, that translates to a reduction of $40 to $80 per household per year on electricity bills.  

These figures capture network cost savings only. The broader benefits of reform - including lower wholesale costs, reduced emissions and improved energy security - are additional to this.

Better price signals mean home batteries and flexible energy use can be rewarded for easing network pressure during peak periods, reducing the need for costly infrastructure investment that every consumer ultimately pays for.

The investment case for rooftop solar and batteries remains strong under reform. Under the modelled scenario, the payback period for solar extends from approximately 4.4 to 4.7 years - about three months longer. For a solar-plus-battery system, from 4.6 to 5.0 years. For households switching from gas to electricity, the payback actually improves - from 8.3 to 7.7 years.

Where any solar and battery households may face higher costs - even modest increases - the consumer protection options identified by HoustonKemp could apply to them too, not just households without CER.

A household that installs a 10kW solar and 20kWh battery system would still accumulate approximately $27,000 in cumulative energy cost savings over ten years under reform, and that figure does not include what the household could earn through dynamic pricing. Dynamic pricing creates a direct financial reward for battery owners that the current system does not offer.  

How reform plays out depends on your circumstances

The illustrative profiles below reflect the scenario based on cautious assumptions described above.  They are not forecasts of what consumers should expect - they are a map of where the risks lie, so that protections can be targeted at the consumers who need them most.  

These profiles also do not include what households could earn through dynamic pricing, which would improve outcomes beyond what the figures show.

Liam and Priya are a Melbourne couple who switched off gas entirely, replacing their heater, hot water system, cooktop and oven with electric alternatives. Because they now use more electricity from the grid, lower variable rates more than offset any rise in fixed charges - their electricity bill in 2040 is up to $600 lower than it would be without reform. The more a household electrifies, the more it benefits.

Manouri and Sean rent a three-bedroom home in Wollongong with their two teenagers. High electricity users without solar or a battery, they are exactly the kind of household the current system is increasingly leaving behind. Under the modelled scenario, their annual bill in 2040 is up to $740 lower than it would be without reform.

Nina the Florist runs a small Sydney shop with low overall electricity consumption. Under the modelled scenario - before any consumer protections are applied - her bill is up to $810 higher by 2040. This is precisely why the AEMC commissioned HoustonKemp to identify practical options to prevent outcomes of this nature, and why no recommendations will be made without those protections in place.  

Protecting consumers through the transition

Electricity retailers already repackage complex network costs into simple consumer offers, so a higher fixed network charge does not automatically mean a higher fixed bill. But the AEMC is not relying on competitive dynamics alone.  

HoustonKemp's advice, published by the AEMC today, confirms that practical options exist at both the network and retail level to protect consumers - from caps on how quickly fixed charges can increase, to requirements that retailers offer a lower fixed charge alternative. The AEMC has not yet determined which options it would adopt.

The modelled transition begins in 2030 and extends over ten years, giving households, businesses, retailers and networks time to adjust. A public forum is being held today alongside publication of this analysis. The Final Report will set out final recommendations as a package and respond to all stakeholder feedback received.

"Getting network pricing right creates the foundation for a smarter energy market, one where retailers can offer simpler, more innovative products, consumers are rewarded for the choices they make, and the benefits of the energy transition flow to every Australian, not just those who can afford to invest in it,” Ms Collyer said.

Visit the project page for more information on the review and for contact details.   

Media: Jessica Rich, 0459 918 964, media@aemc.gov.au