This message first appeared in our June 2026 newsletter. To stay up to date with the latest news and research on energy issues that impact consumers, sign up to receive our monthly newsletter below.
What decision do you think has the largest impact on how much households pay for their energy bills?
One of the biggest drivers is also one of the least understood: the regulated rate of return.
The rate of return is the amount that energy networks can earn on the money they invest in poles, wires, substations and other infrastructure. It is, in effect, the interest rate consumers pay for network investment. Because network costs make up such a large share of electricity bills, even small changes to this rate can flow through to very large amounts of money.
That is why the Australian Energy Regulator’s draft decision on the 2026 Rate of Return Instrument matters so much.
The draft decision is a positive step. If carried through to the final decision, the AER estimates the changes will save consumers around $1.1 billion over the coming years.
This reflects long-running advocacy from Energy Consumers Australia and others, and the AER deserves credit for recognising that consumers should not pay more than necessary to support efficient investment.
But there is still further to go.
We all understand that networks need to invest in safe, reliable infrastructure. The transition will require major investment and consumers rely on that infrastructure every day.
But the evidence does not suggest the current rate of return has stopped networks from investing. In fact, many networks continue to spend at or above their approved capital forecasts.
The task, then, is not to choose between investment and affordability. It is to set the rate at the lowest level that still supports efficient investment.
This distinction matters. If the rate is set too high, consumers pay more than they should. It can also encourage more spending than the system needs. At a time when bills remain under real pressure, that is not a small problem.
The final decision is an opportunity to get this right, and submissions are now open for you to have your input.
Consumers should not be asked to overpay for monopoly infrastructure. The transition must deliver cleaner energy, but it must also deliver affordable energy.
That means every major regulatory decision needs to pass a simple test: is this cost no higher than necessary for consumers?
