Open letter to distributors as low fixed charge regulations come to an end

Electricity retailers and distributors will need to consider the potential impacts on consumers as they re-adjust pricing ahead of 1 April 2027 when the Government’s phase-out of the Low Fixed Charge regulations is complete.

To support this transition, the Authority has issued a letter to distributors outlining its expectations for managing impacts on consumers as they re-adjust their pricing, while continuing to apply the existing ‘Distribution pricing principles'.

Under the 2004 Low Fixed Charge regulations, households must have the option of going on a 'low-user' pricing plan, with the regulations originally setting a maximum of $0.30/day (+ GST).

However, the regulations resulted in some consumers paying higher charges to support lower charges for others. They were also a barrier to more cost-reflective pricing, which can help reduce future network costs and benefit all consumers over time.

In 2022, the Government began a five-year phase-out of the regulations, with the maximum low fixed charge rising each year. From 1 April 2027, retailers will no longer be required to offer a low fixed charge.

As distributors consider pricing methodologies for the next pricing year, the Authority requests they consider two key factors to help avoid sharp increase to consumers' lines charges:

• Consumer impact should be managed and balanced against the other principles of the ‘Distribution pricing principles’
• There is no expectation of an immediate and full adjustment on 1 April 2027, but transparency is required.

The letter also details how these considerations should be applied alongside the existing 'Distribution pricing principles', which promote efficient, subsidy-free and increasingly cost-reflective pricing.