The current electricity tariff structure was designed for a world where power flowed one way: from big generators, through transmission lines, to passive consumers. That world no longer exists. We’ve got 3.5 million rooftop solar systems exporting power back into the grid, batteries charging and discharging based on price signals, and EVs adding massive new loads at varying times.

Our tariff structure hasn’t kept up. And the people paying the price for this mismatch are the ones who can least afford it.

The cross-subsidy problem

Here’s the uncomfortable truth: network costs are currently recovered primarily through volumetric charges — the more kWh you consume, the more you pay for the poles and wires. But solar owners consume fewer kWh from the grid while still relying on it for backup and export.

This means non-solar households are effectively subsidising solar households’ use of the network. Renters, apartment dwellers, and lower-income households who can’t install solar are paying a disproportionate share of network costs.

I say this as a solar owner and advocate. The cross-subsidy is real, it’s inequitable, and it undermines public support for the energy transition. We need to fix it, not pretend it doesn’t exist.

What reform should look like

The solution isn’t to punish solar owners — it’s to restructure how we charge for network services. The key principles:

Separate energy and network charges. Your bill should clearly distinguish between the cost of the electricity itself (the commodity) and the cost of the network that delivers it (the infrastructure). Network charges should be based on your connection capacity and peak demand, not your total consumption.

Reward demand reduction at peak times. If your battery discharges during the evening peak and reduces your draw from the grid, you’re saving the network money. That should be reflected in your charges. Conversely, if you’re pulling 10kW during a heatwave peak, you should pay more because you’re driving the infrastructure costs.

Fair export pricing. Feed-in tariffs should reflect the actual value of exported solar to the grid at the time of export. Midday exports when the grid is flooded are worth less than late afternoon exports when demand is rising. Dynamic export pricing is more complex but more equitable.

Protect vulnerable consumers. Any reform must include protections for low-income households, renters, and people who can’t respond to price signals. A basic energy allowance at affordable rates, funded by those with more capacity to pay, is one approach.

Why reform keeps stalling

Everyone agrees the current system is broken. The AEMC has been studying tariff reform for years. Network businesses have proposed two-part tariffs. Consumer advocates have suggested social tariffs. And yet, meaningful reform keeps being delayed.

The reason is political. Any change creates winners and losers, and the losers are vocal. Solar owners don’t want to pay more in network charges. Non-solar households don’t want to pay more for anything. Politicians don’t want to be blamed for either group’s unhappiness.

So we get incremental tweaks rather than structural reform. Time-of-use tariffs are a step in the right direction. Demand tariffs are another step. But they’re patches on a system that needs a redesign.

What I’d propose

A three-part tariff structure:

1. Fixed network charge based on your connection capacity (e.g., $1.50-2.50/day for a standard residential connection). Everyone who’s connected to the grid pays this, reflecting the cost of maintaining the network regardless of usage.

2. Variable energy charge based on actual wholesale cost at time of consumption. Time-of-use as a minimum, ideally real-time wholesale pass-through with appropriate consumer protections.

3. Dynamic export credit based on the actual value of your exports at the time they occur. Higher for late afternoon exports during demand peaks, lower (or zero) for midday exports during solar floods.

This structure is fair because it charges everyone appropriately for what they use, rewards behaviours that help the grid, and doesn’t penalise solar ownership. It’s also technically feasible — smart meters already provide the data needed.

The urgency

Every year of delay makes reform harder. As more solar and batteries are installed under the current structure, more people have locked in expectations about what they’ll pay (or earn). The longer we wait, the bigger the group of “losers” from any change, and the more politically difficult reform becomes.

I know tariff reform isn’t sexy. Nobody gets excited about network pricing structures. But getting this right is fundamental to a fair, efficient energy transition. And right now, we’re getting it wrong.