Daniel Mercer

As solar panels adorn more rooftops and batteries increasingly soak up excess power for later deployment, the way Australians utilise the power grid is shifting dramatically.

New modelling released today from the Australian Energy Market Commission imagines an overhaul of electricity pricing that it says could cut costs by billions.

But how do the numbers break down and who might be the winners and losers along the way?

Welcome to ABC Business Daily.

Daniel, so good to have you on the podcast today and welcome to the ABC Business Daily family.

There's brand new modelling just released from the Australian Energy Market Commission that suggests some major pricing reforms for the electricity network.

First, can you give us a run through of what the AEMC is and what it does and why they are releasing this report?

Basically, my understanding, the reason they exist is so that we have someone trying to set the rules because we want the electricity market to work as efficiently as possible.

And one of the reasons why they're suggesting these major changes is because we have a

major changes to the pricing is because we have seen major changes to the way electricity is generated in Australia.

But we've also seen a major change in how consumers are utilizing that grid, the poles and wires.

And they're suggesting that both that there are major savings to be had if we work out a better way of pricing the system to get people to utilize it in a way that

makes it less expensive to run than it would otherwise be run, but also to be fairer.

Take us through what is the problem they're trying to solve and what is one of their suggestions to how to solve it?

I mean, it is a fascinating kind of economic problem to try to solve, isn't it?

Because on one hand, you are seeing the government actively encourage people to kind of take energy generation and storage into their own hands, right?

We have active incentives for people to get solar panels and to get batteries to help Australia transition to a more renewable heavy future.

And so the government wants people to be doing that.

But as you said, the issue is that the old pricing model was based on people being charged on how much electricity they were taking from generators through the poles and wires.

And then they were able to come up with a system of payment to make sure that the poles and wires were maintained, new ones were built, et cetera, based on a