The Australian Energy Regulator (AER) has recently released its draft decision on the 2026 Rate of Return Instrument. This will be one of the highest impact decisions for household energy bills in the coming years. If these changes are implemented in the Final Decision, the AER estimates this will save consumers around $1.1 billion over the coming years in the coming round of resets.
This is an outcome Energy Consumers Australia has long advocated for, but we believe that there are still opportunities to reduce the rate of return further to deliver fair value to consumers.
With energy bills remaining a key concern for consumers and governments, it is critical that the rate of return is set no higher than necessary to support efficient investment. Getting this right is essential to ensuring the energy transition delivers not just cleaner energy, but more affordable power for Australian households.
What is the rate of return and why is it important?
Network costs account for around 39 to 45 per cent of electricity costs for households in the National Electricity Market (NEM). Network costs are generally the largest component of consumer electricity bills and have grown materially in some jurisdictions in recent years.
