The Australian Energy Market Commission (AEMC) has opened consultation on two rule change requests aimed at making data centres and other large electricity loads contribute more directly to the network costs they cause or accelerate. The requests were submitted by Federal Climate Change and Energy Minister Chris Bowen in July and seek changes to the National Electricity Rules (NER) covering both distribution and transmission connections.
The AEMC said the consultation comes as the scale and speed of data centre growth is testing existing cost-recovery arrangements. The Commission’s consultation paper says the Australian Energy Market Operator (AEMO) forecasts data centre electricity consumption could rise from about 5 TWh in 2025-26 to around 15 TWh by 2029-30, equivalent to about 8 percent of National Electricity Market (NEM) operational consumption. By 2044-45, the forecast reaches about 41 TWh, or 13.5 percent.
The AEMC said connecting parties already pay for infrastructure required to facilitate their connections, as well as ongoing charges for use of the shared network. The issue under consultation is whether those arrangements adequately capture the costs and risks associated with the scale of some future large-load connections.
Bowen’s requests identify seven potential gaps in the current framework, and the AEMC is seeking views on whether they exist and how material they are.
These include the possibility that a large load connecting to a distribution network could trigger upstream transmission augmentation costs that are partly recovered from other customers; the risk of network assets being built for projects that subsequently do not proceed or use less capacity than expected; and uncertainty over the treatment of clustered large loads requiring major shared network investment.
Large loads
The AEMC is also asking whether there is insufficient public information about existing and prospective large loads to support effective forecasting and network planning, whether transmission-connected large loads should contribute to jurisdictional scheme costs, and whether the rules provide enough guidance around pricing for transmission connection services.
On jurisdictional schemes, the AEMC notes that the existing NER provides a mechanism for recovering such costs from distribution-connected customers, but no equivalent framework currently exists for transmission-connected customers.
Among the changes Bowen proposes is a requirement for network service providers to apply prudential requirements to large connections, alongside limits on their ability to recover stranded customer-specific assets from the broader consumer base.
The proposals would also require network service providers to provide information on existing and prospective large loads to AEMO for a proposed public large-load register. Other measures would make it easier for connection applicants to voluntarily fund, or bring forward, major network augmentations and introduce greater consistency in transmission connection pricing through an Australian Energy Regulator (AER) guideline.
Cost-recovery
The cost-recovery consultation is one part of a broader AEMC data centre reform program. The Commission’s earlier advice to Energy Ministers recommended measures covering clean energy procurement, firming capacity, market registration and demand flexibility. AEMO has separately proposed reforms to improve the operational visibility of large inverter-based loads, while further rule changes are expected covering data centre contracting obligations and the connection process.
The AEMC said it will consider the interlinkages across these reforms, and its consultation paper notes that connection pricing can depend on the registration status of a connection applicant, creating an interaction between the cost-recovery proposals and the operational-visibility reforms.
The Commission is also coordinating its work with other regulatory processes. These include a forthcoming AER review of distribution connection-charge guidelines, NSW proposals for network cost allocation, and the Federal government’s emerging national standards for new data centres. The AEMC notes that most elements of the NSW proposals are very similar to the solutions proposed in the rule change requests.
The AEMC expects to publish a draft determination on the two rule changes on 1 April 2027. The Commission says the timetable has been extended because of the complexity of the proposals and their interaction with its wider data centre reform program. Submissions close on 5 November 2026.