AEMC Electricity Pricing Reform: What the Loyalty Tax Ban Means for Your Power Bill
The Australian Energy Market Commission (AEMC) is proposing one of the most significant changes to electricity pricing in a decade: if you are on the same plan as someone else, you should pay the same price — regardless of whether you signed up yesterday or five years ago.
It is called the “loyalty tax” and it works like this: a retailer offers a discounted rate to attract new customers, then quietly charges existing customers a higher rate on the same plan. You have been loyal, so you pay more. The AEMC’s Pricing Review (reference EPR0097) wants to end that practice.
The draft report was published in December 2025. A public forum is scheduled for 23 April 2026, and the final report is expected in June 2026. Implementation would begin in 2026 and roll out over approximately 10 years.
Here is what the reform proposes, how it could affect your electricity bill, and what to watch for.
TL;DR
The AEMC is proposing six reforms to how electricity is priced in Australia. The headline change: banning the “loyalty tax” so all customers on the same plan pay the same price. Other proposals include making retailers compete for passive customers, simplifying network fees, upgrading the Energy Made Easy comparison tool, and fairly sharing the costs of rooftop solar and batteries. Public forum on 23 April 2026, final report expected June 2026. Implementation would span approximately 2026 to 2035.
What Is the Energy Loyalty Tax?
Under current rules, an electricity retailer can charge different prices to different customers on the same plan. In practice, this means:
- New customers get an attractive introductory rate — “25% off for 12 months” or a low per-kWh rate
- Existing customers on the same plan pay a higher rate once their introductory period ends, or simply because they have not switched
- The retailer has no obligation to tell you that newer customers are paying less for the identical product
The result is a hidden surcharge on loyalty. Customers who do not actively shop around — whether because they are busy, do not realise they can switch, or find the comparison process confusing — end up subsidising the discounts offered to new sign-ups.
This is not a small problem. The AEMC’s review found this pricing practice is widespread across the National Electricity Market (NEM), covering Queensland, New South Wales, Victoria, South Australia, and Tasmania.
The Six Proposed Reforms
The AEMC’s draft report proposes six changes across three themes. These are recommendations at this stage — the final report is expected in June 2026.
Theme 1: Fair Pricing
1. Ban the loyalty tax — same plan, same price
The core proposal: retailers would be required to charge all customers on the same plan the same price. No more charging long-standing customers more than new sign-ups for an identical product.
This does not mean all plans must be the same price — retailers can still offer different plans with different pricing structures. But within any single plan, the price must be uniform.
2. Compete for passive customers
Currently, if you do not actively choose a plan or engage with your retailer, you may end up on a standing offer (the safety-net price) or simply remain on an expired promotional plan at a higher rate. The AEMC proposes that retailers should be required to actively compete for these “disengaged” customers rather than profiting from their inactivity.
The goal is to ensure that households who do not shop around still receive competitive pricing, not just the default rate.
Theme 2: Simpler Network Costs
3. Redesign how network fees flow to consumers
Network costs (the charges from your local distributor — Ausgrid, Energex, SA Power Networks, etc.) make up a significant portion of your electricity bill. Currently, these costs have complex structures that retailers pass through in ways that can be confusing.
The AEMC proposes redesigning network fee structures so that retailers can more easily “translate” them into diverse, simple customer products. The aim is to give retailers more flexibility to create innovative plans while keeping the underlying cost signals intact.
Theme 3: Better Tools and Fairer Costs
4. Upgrade Energy Made Easy
The AER’s Energy Made Easy comparison website is the government’s official tool for comparing energy plans. The AEMC recommends significant investment to upgrade its functionality, making it easier for households to find and compare plans.
5. Fair cost sharing for solar and batteries
As rooftop solar and home battery adoption accelerates, the costs of managing distributed energy on the grid need to be shared fairly. Currently, households without solar may bear a disproportionate share of network costs created by managing solar exports. The AEMC proposes adjustments to ensure costs are allocated equitably as the grid transitions.
6. Support innovative products
The reform aims to create a regulatory environment that supports new energy products — virtual power plants, flexible pricing, demand response programs, and other innovations that give consumers more control over their energy costs.
Who Does This Affect?
States covered
The reform covers the five states and territories in the National Electricity Market (NEM):
- Queensland
- New South Wales
- Victoria
- South Australia
- Tasmania
Western Australia and the Northern Territory operate separate electricity markets and are not covered.
Which customers?
The loyalty tax ban would affect all residential customers on market offers — which is the majority of Australian households who have actively chosen an energy plan. The reforms around passive customers would specifically target the estimated 250,000+ households still on standing/default offers and those on expired promotional plans.
What Is the Timeline?
| Date | Event |
|---|---|
| July 2024 | AEMC begins Pricing Review (EPR0097) |
| December 2025 | Draft report published with six recommendations |
| February 2026 | Public submissions closed |
| 23 April 2026 | Public forum (upcoming) |
| June 2026 (expected) | Final report |
| 2026 onwards | Implementation begins |
| ~2035 | Full implementation target |
The 10-year implementation timeline reflects the complexity of changing pricing structures across the entire NEM. Some changes (like the loyalty tax ban) could take effect relatively quickly after regulatory instruments are developed. Others (like network fee redesign and Energy Made Easy upgrades) require longer lead times.
Important: These are currently recommendations in a draft report. The final report in June may modify, strengthen, or drop some proposals based on public feedback and the upcoming forum. Until the final report is released and translated into binding rules, current pricing practices remain in place.
What Does This Mean for Your Bill Right Now?
The honest answer: nothing changes immediately. This is a reform process, not a rule that takes effect next month.
However, the direction is clear — the AEMC is signalling that the era of loyalty penalties in energy pricing is ending. Here is what is worth doing now:
1. Check if you are paying a loyalty tax
If you have been with the same retailer for more than 12 months and have not reviewed your plan, there is a reasonable chance you are paying more than new customers on the same or similar plans. Compare your current rate against what is available.
Compare energy plans free at internest.com.au/energy — enter your postcode and usage to see current plans ranked by estimated annual cost. No commission, no sign-up.
2. Do not wait for the reform to switch
The reform will take years to fully implement. If you are overpaying now, switching today saves you money today. The average household not on an optimal plan could save hundreds per year by moving to a competitive market offer.
3. Check the Solar Sharer Offer from July
Separately from this pricing reform, the Solar Sharer Offer launches on 1 July 2026 — three hours of free electricity daily for NSW, QLD, and SA households, no solar panels required. Estimated savings of approximately $438 to $657 per year.
4. Watch for the final report in June
The final report will confirm which reforms proceed and on what timeline. If the loyalty tax ban is confirmed, it will be a significant shift in how retailers price their plans — and could trigger a wave of plan restructuring across the market.
Market Context: Why Now?
The reform comes at a pivotal moment for Australian energy:
- Wholesale electricity prices dropped 44% year-on-year in Q4 2025 (from ~$89/MWh to ~$50/MWh), driven by increasing solar generation and lower demand
- The DMO 2026-27 is confirmed to decrease residential reference prices by 1.3% to 10.1% across all zones from 1 July 2026
- Smart meter deployment is accelerating, with a national target of all customers by 2030 — enabling more sophisticated pricing and real-time data access
- Rooftop solar penetration continues to grow, creating both surplus energy during the day and new challenges for cost allocation
The combination of falling wholesale costs, regulatory price decreases, and the loyalty tax ban could mean the most consumer-friendly energy pricing environment in years — provided the reforms are implemented effectively.
Frequently Asked Questions
What is the energy loyalty tax?
The loyalty tax is the practice where electricity retailers charge existing customers more than new customers for the same plan. The AEMC’s pricing review proposes banning this practice, requiring all customers on the same plan to pay the same price.
When will the loyalty tax ban take effect?
The AEMC’s final report is expected in June 2026. If the recommendation is confirmed, it would then need to be translated into binding rules — the overall implementation timeline stretches from 2026 to approximately 2035, though specific reforms like the loyalty tax ban could take effect earlier within that window.
Does this apply in Victoria?
Yes. The pricing review covers all five NEM states: QLD, NSW, VIC, SA, and TAS. Victoria is included despite having its own retail regulatory framework through the ESC — the AEMC’s NEM-wide reforms would apply alongside existing Victorian protections.
Will my electricity price automatically go down?
Not automatically. The reform removes the ability to charge different prices for the same plan, but it does not set prices. Retailers will still compete on pricing, and the most effective way to ensure you are on a competitive plan remains comparing and switching. The reform simply ensures you are not penalised for staying.
What is the public forum on 23 April?
The AEMC is holding a public forum on 23 April 2026 to discuss the draft report’s six recommendations. Stakeholders — including retailers, consumer groups, and network businesses — will provide input that shapes the final report due in June.
How is this different from the DMO/VDO?
The Default Market Offer (DMO) and Victorian Default Offer (VDO) set maximum reference prices for standing offers — the safety-net plans for customers who have not actively chosen. The pricing reform (EPR0097) addresses how market offers are priced, specifically targeting the practice of charging loyal customers more. They are complementary but separate regulatory mechanisms.
General information only, not personal financial advice. Information sourced from the AEMC Pricing Review Draft Report (EPR0097), published December 2025. Proposals are draft recommendations subject to the final report expected June 2026. Market data sourced from Ashurst, February 2026. Estimates may vary.