What Businesses Need to Know About Unaccounted for Energy (UFE) & Rising Electricity Costs

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From 1 March 2025, Australian businesses will start seeing a new charge on their electricity invoices, Unaccounted for Energy (UFE). This additional cost is a result of changes introduced by the Australian Energy Market Commission (AEMC) under the Global Settlement framework, which aims to improve fairness and transparency in electricity billing. As these charges are passed on by electricity retailers, businesses need to be aware of how they work and what they mean for commercial electricity expenses.

What Is Unaccounted for Energy (UFE)?

UFE is the difference between the total electricity supplied to a distribution area and the recorded consumption by businesses and households, after accounting for technical losses. Sources of UFE include:

  • Electrical losses in the network
  • Metering inaccuracies
  • Unmetered connections (such as street lighting)
  • Energy theft or unregistered consumption

Previously, under the old “settlement-by-difference” system, only the default local retailer bore the costs of these discrepancies. However, under the Global Settlement framework implemented in 2022, all retailers now share the burden of UFE, and those costs are being passed down to customers.

How Will Unaccounted for Energy Impact Business Electricity Costs?

From March 2025, Unaccounted for Energy charges will appear under the AEMO Ancillary Charge in the ‘Regulatory Charges’ section of business electricity invoices. The impact will vary depending on location, with charges set per megawatt-hour (MWh) as follows:

StateUnaccounted for Energy (UFE)
Rate ($/MWh)
NSW / ACT0.08
QLD0.55
VIC0.01
SA1.84

These charges mean businesses in states like South Australia will face higher additional costs compared to those in Victoria, where the rate is minimal.

Why Is UFE a Concern for Businesses?

  1. Higher Electricity Prices – UFE adds another layer of costs to already rising commercial electricity rates, impacting businesses that rely on energy-intensive operations.
  2. Lack of Transparency – Unlike traditional network charges, UFE is difficult for businesses to track and manage directly, making cost reductions challenging.
  3. Uneven Impact – Some states have significantly higher UFE charges, affecting business competitiveness depending on location.

What Can Businesses Do to Minimise the Impact?

1. Work with an Electricity Broker

An electricity broker can help businesses navigate commercial electricity contracts, ensuring they secure the most cost-effective rates. Brokers analyse the market to find plans that mitigate the impact of rising regulatory charges, including UFE.

2. Improve Energy Efficiency

Reducing overall energy consumption can offset rising electricity prices. Businesses should consider:

  • Upgrading to energy-efficient equipment
  • Installing smart meters to track usage more accurately
  • Implementing demand-side management strategies

3. Consider Renewable Energy Solutions

Switching to solar or other renewable sources can reduce dependency on grid electricity, lowering exposure to UFE charges and future network cost increases.

Looking Ahead: The Future of Business Electricity Pricing

The introduction of Unaccounted for Energy charges is part of a broader shift in how electricity is priced and settled in Australia. With rising business electricity costs, companies should proactively review their energy contracts and consider strategies to minimise their exposure to new charges.

For more details, visit the AEMC website or AEMO’s Global Settlement Fact Sheet. If you need assistance in reviewing your energy costs, reach out to an electricity broker to explore your options.

By staying informed and proactive, businesses can better manage their electricity expenses in an evolving market.

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