South Australia finds itself at a crossroads familiar to modern societies: the promise of abundant, reliable, and affordable energy has quietly fractured into a forced choice between competing goods. Since 2008, electricity prices have risen 117 percent, driven largely by infrastructure investment that rewards network operators while burdening households, and a new reliability mechanism adds further cost even as water bills climb in parallel. Energy expert Daniel Rossetto is asking the question that policy rarely dares to voice — that affordability, sustainability, and reliability cannot all b
SA urged to accept occasional blackouts to curb soaring power costs
Rising utility costs disproportionately impact lower-income households struggling with affordability, though no immediate displacement or casualties reported.
We demand the highest standards of reliability. Nobody is prepared to tolerate any downtime.
Mark
So the core problem is that grid operators profit from the size of their network, not from running it efficiently?
Mimi
Exactly. Their income is tied to the asset value of the network. The bigger the network, the more they can charge. So there's a built-in incentive to invest heavily, sometimes more heavily than strictly necessary.
Mark
And regulators just approve whatever tariffs they propose?
Mimi
Regulators set the ceiling on default market offers, but the network costs themselves are largely determined by what the operator has spent. It's a system that rewards capital investment, which sounds reasonable until you realize it means bills keep rising even when the grid is working fine.
Mark
Why can't Australia just choose reliability and affordability together?
Mimi
Because you have to pick your battles. You can have cheap power, or you can have power that never fails, or you can have renewable power. But paying for all three simultaneously means costs spiral. Most people say they want reliability, so that's what gets funded.
Mark
And Rossetto is saying people should be willing to accept blackouts?
Mimi
He's saying people should be honest about the trade-off. If you want meaningfully cheaper bills, you have to give something up. Maybe it's accepting occasional outages. Maybe it's slower decarbonization. But right now, we're pretending we can have everything, and the bills reflect that pretense.
Mark
Is anyone actually listening to this argument?
Mimi
Not yet. The government is building more batteries and keeping gas generators online—all the infrastructure solutions. Nobody's asking whether South Australians would prefer lower bills and occasional blackouts to the current path.
The Pulse
- Household electricity bills have more than doubled since 2008, and a new $23-per-year reliability charge took effect July 1, landing on budgets already stretched to breaking point.
- The mechanism behind the surge is structural — network operators profit by investing in infrastructure, and regulators allow them to charge customers accordingly, creating a system that rewards spending regardless of whether consumers benefit.
- Energy expert Daniel Rossetto is challenging a foundational assumption: that Australians can demand perfect reliability, rapid decarbonisation, and low bills simultaneously — arguing the country must choose, yet rarely does.
- The new Firm Energy Reliability Mechanism will fund $2.2 billion in battery storage and extend a gas generator's life to 2028, with the government framing the cost as cheaper than the blackouts or price spikes that would follow inaction.
- Water bills are compounding the pressure, rising 3.5 percent plus inflation from July 1 — part of a 232 percent climb since 2001 — with lower-income households absorbing costs that policy conversations have yet to honestly address.
South Australia finds itself at a crossroads familiar to modern societies: the promise of abundant, reliable, and affordable energy has quietly fractured into a forced choice between competing goods. Since 2008, electricity prices have risen 117 percent, driven largely by infrastructure investment that rewards network operators while burdening households, and a new reliability mechanism adds further cost even as water bills climb in parallel. Energy expert Daniel Rossetto is asking the question that policy rarely dares to voice — that affordability, sustainability, and reliability cannot all be maximised at once, and that the community must decide what it is willing to sacrifice. The deeper tension is not merely economic but democratic: who holds the conversation about trade-offs, and who bears the cost of avoiding it?
South Australia is caught in a bind with no clean exit. Power bills have climbed 117 percent since 2008, water bills have risen 232 percent since 2001, and a new grid reliability scheme called FERM added another $23 to the average household's annual electricity cost from July 1. The state is spending more to keep the lights on, and the question of whether that spending is sustainable — or even necessary at its current scale — is only beginning to be asked aloud.
The engine driving electricity costs is largely structural. Grid operators have invested heavily in network infrastructure, and regulators permit them to charge customers based on the value of those assets. Every dollar spent on the network becomes a dollar baked into bills. Network costs — the price of simply moving electricity from generators to homes — now dominate what households pay, regardless of what happens in the generation market.
Adelaide University energy expert Daniel Rossetto has started asking an uncomfortable question: what if Australians stopped demanding everything at once? He argues that energy policy faces three competing priorities — affordability, sustainability, and reliability — and that pursuing all three simultaneously is what keeps bills rising. The demand for near-perfect reliability, he notes, means constant investment to handle peak moments like extended heatwaves, and those costs flow directly to consumers. His provocation is simple: would Australians accept occasional blackouts in exchange for meaningfully lower bills? The conversation, he says, rarely happens.
The FERM scheme illustrates the tension. It will collect around $44 million this financial year to fund six battery projects and keep AGL's Torrens Island gas generator running until at least mid-2028. Energy Minister Tom Koutsantonis defended the cost by pointing to the alternative — generation shortfalls, brownouts, or extreme price spikes. Paying now, the argument goes, is cheaper than the chaos of not paying.
Water bills are following the same logic. SA Water charges will rise by 3.5 percent plus inflation, adding roughly $112 annually for the average household. The government points to necessary infrastructure expansion, particularly for new housing developments. Housing Minister Nick Champion argued the state must keep investing or face pressure failures and connection problems. But Rossetto's broader challenge applies equally here: the community is not yet having an honest conversation about what it is willing to trade away — in speed, in comfort, in equity — if it wants reliable and affordable utilities. The bills keep arriving. The conversation keeps waiting.
South Australia is caught in a bind that has no clean exit. Power bills keep climbing, water bills are climbing faster, and now an energy expert is suggesting the state may need to accept something Australians have grown accustomed to avoiding: the occasional blackout.
The arithmetic is straightforward enough. A new grid reliability scheme called FERM—the Firm Energy Reliability Mechanism—took effect on July 1 and will cost the average household an extra $23 on their power bill next year. That's on top of bills that have already become unaffordable for many. Since 2008 alone, electricity prices have jumped 117 percent. Before that, from the 1980s through the mid-2000s, power costs had tracked roughly in line with general inflation. Then something shifted. The climb became relentless.
The culprit, according to energy experts, is infrastructure. Grid operators have invested heavily—sometimes, they argue, too heavily—in the network that carries electricity to homes and businesses. Every dollar spent on that infrastructure gets added to the network's asset value, and regulators allow operators to charge customers based on that value. It's a system that rewards investment, sometimes generously. The result is that network costs, the price of simply moving power from generators to your house, now make up the bulk of what you pay on your electricity bill.
Daniel Rossetto, an energy technology expert at Adelaide University, has begun asking a question that makes many uncomfortable: What if we stopped trying to have everything at once? He points out that energy policy faces three competing demands—affordability, sustainability, and reliability. "One of the most important reasons why electricity bills continue to go up," he said, "is essentially because we demand the highest standards of reliability. Nobody in Australia, with the exception of maybe a few rural communities, is prepared to tolerate any downtime." That demand for perfect reliability means money flows constantly into the grid to handle peak moments—extended heatwaves, for instance—when demand spikes. Those costs get passed to consumers. Rossetto's suggestion: perhaps Australians should ask themselves whether they're willing to accept occasional blackouts in exchange for meaningfully lower bills. Or slower progress on renewable energy. Or both. The conversation, he argues, rarely happens.
The FERM scheme itself reflects this tension. It will collect about $44 million this financial year to fund six new battery projects worth $2.2 billion—providing eight hours of storage—and to keep AGL's Torrens Island gas generator running until at least mid-2028, when it was originally scheduled to close. Energy Minister Tom Koutsantonis defended the cost by pointing to what would happen without it: shortfalls in generation, brownouts, or extraordinarily high prices spiking in the market to attract more power. The alternative to paying now, in other words, is paying more later or going without.
Water bills are following a similar trajectory. South Australians will see their SA Water bills rise by 3.5 percent plus inflation from July 1—about $28 per quarter for the average household. That's a $112 annual increase. The government attributes it to necessary network investment, especially as new housing developments require expanded infrastructure. But the numbers tell a longer story: water and sewerage bills have climbed 232 percent since 2001-02, though an inquiry later found some of those increases were inflated because the government had overestimated asset values in 2013.
Rossetto's broader point applies here too. Housing Minister Nick Champion said the state must keep investing in water infrastructure or face pressure problems and connection failures. Fair enough. But the question Rossetto raises—the one politicians rarely voice—is whether the community is willing to make trade-offs elsewhere if it wants reliable, inexpensive utilities. What gets sacrificed? What gets delayed? Who decides? These are the conversations South Australia is not yet having, even as household budgets tighten and the bills keep arriving.
Notable Quotes
One of the most important reasons why electricity bills continue to go up is essentially because we demand the highest standards of reliability. Nobody in Australia is prepared to tolerate any downtime.— Daniel Rossetto, energy technology expert at Adelaide University
If we didn't have this system in place and Torrens Island closed, you would have shortfalls in generation. You'd either have brownouts, or extraordinarily high prices to be incented into the market to get more generation in.— Tom Koutsantonis, Energy Minister
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Economy & Finance