A 2014 decision by the Australian Energy Market Commission (AEMC) obliges electricity distributors in the National Electricity Market (NEM) to develop new electricity tariffs. These tariffs must be cost reflective – that is, the prices distributors charge must reflect “the efficient costs of providing network services to each consumer.”

Cost reflective pricing is a complex topic, but network tariff reform will significantly change the way distributors charge for energy. This will affect retail electricity plans. The effects on consumers’ bills are still uncertain, but the time to put views forward in the process is now. CUAC’s report is designed to help consumers, consumer advocates, and community groups engage with electricity distribution businesses and policy makers in their development and implementation of cost reflective tariffs.

Cost Reflective Pricing: Engaging with Network Tariff Reform in Victoria explains the regulatory background to network tariff reform, the economic concepts underpinning cost reflective pricing, and the different components that might be combined to form a cost reflective tariff. The report summarises current Victorian distributor tariff proposals and research into the effects of different tariffs on different consumers, and well as proposing an implementation model for cost reflective tariffs. The principles of the report are relevant to all states in the NEM (Queensland, NSW, ACT, Victoria, SA, Tasmania).