Australian households and small businesses could see significant reductions in their electricity bills, with new modelling from the Australian Energy Market Commission (AEMC) indicating that reforms to network cost recovery could deliver up to $6 billion in system savings over the next 15 years. Released on April 22, 2026, this analysis proposes a fundamental shift in how network charges are applied, potentially saving some families up to $740 annually on their electricity bills by 2040.
The AEMC’s draft recommendations, part of a broader review into electricity network regulation, aim to modernise pricing structures to better reflect the evolving energy landscape, where consumers are increasingly also generators through rooftop solar and batteries. While the full impact will unfold over time, the announcement provides a timely insight into the potential long-term benefits of a more efficient and equitable grid.
Reforming Network Costs: A Path to Lower Bills
The core of the AEMC’s proposal is a reform of how electricity network costs – the charges for maintaining poles, wires, and other infrastructure – are recovered. Currently, these costs are largely passed on to consumers through fixed daily supply charges and variable usage charges. The modelling suggests that by refining these structures, costs can be lowered for most households, including those without solar or batteries.
According to AEMC Chair Anna Collyer, the analysis reflects how Australia’s energy system has changed dramatically, necessitating a pricing overhaul. “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 stated. “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 who invest in solar and batteries, and a more resilient system for everyone.”
The reforms are projected to deliver an average reduction of $40 to $80 per household per year on electricity bills by 2040, purely from network cost savings. These figures do not include the additional benefits of lower wholesale costs, reduced emissions, and improved energy security that are also anticipated.
“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.”
Who Benefits and How?
Crucially, the AEMC’s modelling indicates that approximately two-thirds of households currently unable to install solar or batteries are projected to be better off under the proposed reforms. For high electricity users without solar or batteries, some could see their annual bills in 2040 reduced by as much as $740 compared to a scenario without reform.
Households that electrify their homes, for example by switching from gas appliances to electric heat pump hot water systems or electric heating, could also benefit significantly. The modelling shows that for a Melbourne couple who fully electrified their home, their electricity bill in 2040 could be up to $600 lower than it would be without the proposed reforms, as lower variable rates more than offset any rise in fixed charges. The more a household electrifies, the more it stands to benefit.
Impact on Solar and Batteries
For those considering clean energy investments, the AEMC’s analysis suggests the investment case for rooftop solar and batteries remains strong. While the payback period for solar might extend slightly from approximately 4.4 to 4.7 years (about three months longer), and for a solar-plus-battery system from 4.6 to 5.0 years, the overall benefits persist. In fact, for households transitioning from gas to electricity, the payback period for their clean energy investments could actually improve, from 8.3 to 7.7 years.
This continued strong incentive for solar and battery adoption is vital for Australia’s energy transition. For homeowners and businesses evaluating their options, understanding these long-term pricing signals is crucial. More information on financing options for these technologies can be found in our guide: Best Solar Panel & Home Battery Financing Options in Australia 2026: Loans, PPAs & Green Mortgages Explained.
Next Steps for the AEMC and Consumers
It is important to note that the AEMC has not yet made final recommendations. The current findings will be considered alongside more than 2,700 submissions received during the consultation period, with the Final Report scheduled for publication in June 2026. This allows time for targeted consumer protections to be developed and for retailers to work with networks to design new products and services for customers.
While the modelled scenario assumes direct pass-through of network costs without other consumer protections, independent analysis from HoustonKemp Economists, commissioned by the AEMC, outlines practical options to protect consumers who may face higher bills.
These reforms are distinct from the Default Market Offer (DMO) and Victorian Default Offer (VDO) price determinations, which focus on retail price caps for standing offers. Instead, the AEMC’s work addresses the underlying structure of network charges, aiming for a more efficient and responsive energy market in the long term. As Australian energy users continue to seek ways to manage costs, understanding both retail offers and the foundational network pricing reforms will be key. For strategies to manage immediate bill impacts, consider reviewing Australia’s Top Energy-Efficient Home Upgrades 2026: Maximise ROI as Electricity Bills Soar This Winter.
This structural reform, if implemented, could fundamentally reshape how Australians pay for and consume electricity, rewarding efficient use and distributed energy resources while aiming to lower overall system costs for the benefit of all. The coming months, leading up to the AEMC’s final report, will be critical in shaping the future of Australian electricity pricing.
| Household Type | Current Bill (Illustrative) | Potential Annual Savings by 2040 | Payback Period Change (Solar/Battery) |
|---|---|---|---|
| High-use, no solar/battery | Varies significantly | Up to $740 | N/A |
| Electrified home (gas to electric) | Varies significantly | Up to $600 | Improves (8.3 to 7.7 years) |
| Solar only | Varies significantly | $40-$80 (network only) | Extends slightly (4.4 to 4.7 years) |
| Solar + Battery | Varies significantly | $40-$80 (network only) | Extends slightly (4.6 to 5.0 years) |
Note: Savings figures are based on AEMC modelling by 2040 and illustrative. Individual savings will vary based on usage, location, and specific circumstances.