South Australian households and businesses are paying a new charge on their electricity bills this year, with the state government now admitting its Firm Energy Reliability Mechanism is adding to costs.

The ABC reports the FERM, which came into effect on 1 July, will collect almost $44 million from SA energy users in 2026-27. That works out to roughly $23 per household over the year. It doesn’t appear as a separate line item on bills, it’s folded into the network cost component, recovered by ElectraNet through SA Power Networks.

Energy Minister Tom Koutsantonis confirmed the scheme has pushed up bills, but argued they’d be higher without it. “Has it contributed? Yes, but take it out, I actually think prices would be a lot higher going forward without it,” he told the ABC. About $20 million of the FERM funds will incentivise six new battery projects worth $2.2 billion, expected online from 2028. A further $24 million is understood to be going to AGL to keep its ageing gas-fired Torrens Island power station running for the next 12 months.

The Australian Energy Regulator cited the FERM as one reason SA’s default market offer rose 1.4 per cent (around $33) for 2026-27, while NSW customers saw drops of up to $137 and south-east Queensland customers saved around $155. Network costs in SA jumped 8.6 per cent year-on-year, the largest single component shift in the AER’s final determination.

The South Australian Council of Social Service has called the FERM a “hidden charge”, saying it’s regressive and will hit low-income, high-usage households and renters hardest. One Adelaide CBD building manager told the ABC his electricity bill for running gates and common-area lighting would rise 43 per cent this year, a $226 jump to $725.

For tradies running workshops, charging electric tools or vehicles, or fitting battery storage systems for SA clients, the FERM is a real operating cost even if it’s invisible on the bill. The battery projects it funds won’t come online until 2028 at the earliest, so the charge is locked in now for benefits that are still a couple of years away.

Frequently asked questions

Why doesn’t the FERM charge show on my SA power bill?

The FERM isn’t listed as a separate line item. It’s folded into the network cost component of your bill, recovered by ElectraNet through SA Power Networks.

What is the FERM money being spent on?

About $20 million will incentivise six new battery storage projects worth $2.2 billion, expected online from 2028. A further $24 million is understood to be going to AGL to keep its Torrens Island gas-fired power station running for the next 12 months.

Will SA power bills come down once the battery projects are built?

Energy Minister Tom Koutsantonis argued the scheme will keep prices lower over time, but the battery projects aren’t expected online until 2028 at the earliest, so ratepayers are paying now for benefits still years away.

Sourced from ABC News, Australian Energy Regulator. Original article.