New energy scheme adding to bills, SA government admits

A new energy scheme introduced by the South Australian government is contributing to increased household electricity bills, the ABC has revealed. The Firm Energy Reliability Mechanism (FERM), which became effective on July 1, is projected to collect nearly $44 million from South Australian energy users in the 2026-27 financial year.

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Has it contributed? Yes, but take it out, I actually think prices would be a lot higher going forward without it.

The SA government established the FERM to bolster the electricity grid with extra power during critical times, aiming to prevent wholesale price surges that drive up consumer costs. Although not itemized as a separate charge on energy bills, the cost is recovered by ElectraNet through SA Power Networks as part of the network cost component. This expense, estimated at approximately $23 per household annually, is passed on to consumers by their retailers.

Energy Minister Tom Koutsantonis acknowledged the scheme's contribution to this year's electricity bills. However, he asserted that without the FERM, prices would have risen even more significantly. "Has it contributed? Yes, but take it out, I actually think prices would be a lot higher going forward without it," Koutsantonis stated. He expressed confidence that the FERM has kept the default market offer lower than it otherwise would have been, preventing potential brownouts or substantially higher electricity costs due to market shortfalls.

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What I'm saying to you is, and what … I'm prepared to back my reputation on is, that the FERM has made sure the default market offer was not higher than it otherwise would have been.

The Australian Energy Regulator (AER) identified the FERM's introduction as a factor in the increase of South Australia's default market offer for 2026-27, which was expected to rise by 1.4 percent. The regulator's final determination indicated that the FERM costs are included within the network cost component of the bill. This decision directly affects an estimated 66,000 South Australian electricity users on the default offer, which serves as a price ceiling for retailers.

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If there are shortfalls in power that the market is not meeting, that means we either have brownouts or you pay considerably more for your electricity costs.