Network tariffs applicable to households in Australia: empirical evidence

11 Feb 2015

Executive summary:
This report presents information and analysis of the network tariffs applicable to household electricity consumers in the southern and eastern states of Australia covered by the National Energy Market (NEM). The paper is the first of four papers focused on network tariffs from the perspective of households.

Key findings include:

  • A range of network tariff structures are used throughout the NEM. Inclining block rate tariffs (with small price increments) and two-part tariffs are common.
  • The most expensive network tariff in Australia is almost four times higher than the least expensive.
  • The average network charge to households in Victoria is about a third of that elsewhere in the NEM
  • The gap between least expensive and most expensive network tariff has doubled over the last seven years.
  • Network service providers in Queensland have the highest charges and also the greater proportion of their charge is fixed. The Queensland distributors and Ausnet Services in Victoria have increased their fixed charges significantly recently. In the 2015/16 year (not covered in this report Citipower and Powercor have both increased their fixed charges significantly).
  • Network service providers are typically increasing fixed charges more quickly than variable charges.
  • The international comparison shows that network tariffs in Britain are generally much lower than anywhere in Australia. The average network charge in Denmark and New Zealand is roughly comparable to those in Victoria, the lowest network cost jurisdiction in the NEM.
  • The proportion of revenue recovered from fixed charges charged to most consumers in the NEM is higher than that in Britain, Denmark and New Zealand. Some distributors in Victoria have relatively smaller fixed charges, while those in Queensland and Essential Energy in New South Wales have fixed charges that are much higher than those found elsewhere. In NZ, network tariffs with higher fixed charges apply to households with high levels of consumption (> 9 MWh per year).
Publication Details
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Subject Areas
Geographic Coverage