At a glance
The national electricity rule maker opened consultation on 24 September 2026 on Chris Bowen's requests to make data centres pay their share of the grid upgrades they trigger.
Submissions close on 5 November, and the commission has moved its deadline for a draft decision to 1 April 2027 because the requests are complex.
New South Wales intends to make closely matching state rules in the final quarter of 2026, once a bill before its Legislative Council passes.
Bowen's two requests name seven gaps, from the cost of upgrading high-voltage lines to a public register of large connections.
The commission is asking whether developers that pay for shared network upgrades should recover part of the cost from projects that connect later.
The Australian Energy Market Commission, which writes the rules for the national electricity market, published its consultation paper on 24 September 2026 on two rule change requests from Climate Change and Energy Minister Chris Bowen. Bowen lodged them on 22 July, asking that data centres and other large electricity users make an "appropriate contribution" to the network costs they cause or make necessary sooner. Submissions close on 5 November, and the commission's draft decision is due on 1 April 2027. The commission used its power under the National Electricity Law to extend that deadline, citing issues of "sufficient complexity or difficulty", and says the extra time lets submitters weigh how the requests interact with its other data centre rule changes.
New South Wales is writing its own rules alongside the national process, under a bill now before the state's parliament. Its energy department says national reform "will take time to develop and implement", and that, given the pace of data centre development in the state, the government "has chosen to act now". If the bill passes and the state makes its regulations in the final quarter of 2026 as planned, NSW rules on entry bonds, capacity charges and transmission costs will apply to large connections there while the national process runs to its April 2027 draft. The commission says most elements of the NSW proposals are very similar to Bowen's, and NSW says it may repeal its own requirements once national reform covers them.
Bowen's requests name seven gaps in the national rules
Most homes and businesses take power from a distribution network, the local poles and wires, while the largest users can connect straight to the high-voltage transmission network. Several of the seven gaps turn on that difference. Bowen split them across two packages, and the four in the first package were set out when the commission published both in August 2026. The consultation paper puts them to the industry together and says the two may be merged.
The gap | Bowen's proposal |
|---|---|
A data centre on the local network triggers high-voltage upgrades | The data centre pays, with any cost overrun recovered later |
Capacity is reserved for projects that never connect | Prepayments or bank guarantees above a size threshold |
Assets built for one customer can pass to all customers | Tighter limits on shifting those costs |
There is no public list of large connections | AEMO publishes a register of large loads |
Rules are unclear when a developer funds a shared upgrade | Clearer rules and fewer barriers |
Large users on the high-voltage network do not pay state scheme costs | Those users contribute |
The rules give little detail on pricing high-voltage connections | A new Australian Energy Regulator guideline |
Source: Australian Energy Market Commission, Cost recovery for network augmentations, Packages 1 and 2, consultation paper, 24 September 2026. The first four gaps form Package 1 and the last three Package 2.
State energy schemes, such as the New South Wales Electricity Infrastructure Roadmap, are funded through charges that can only be recovered from customers on distribution networks, so a data centre that connects to transmission does not contribute to them. Bowen and New South Wales both propose closing that gap.
The paper asks submitters whether the security requirement should apply only above a size threshold, and what that threshold should be. The proposed register targets the same risk of capacity reserved for projects that may not proceed, and Bowen's request argues it would help networks identify speculative, duplicate and dormant applications. CDC has called for "stringent and clear requirements upfront" to "separate what is real investment" in the connection queue.
NSW schedules its rules for the final quarter of 2026
New South Wales says data centres were seeking connections totalling up to 28GW as of July 2026, with around 13GW of that in advanced discussions. The state consulted on ten reforms to 14 September 2026, including an entry bond of A$30,000 for every megawatt a data centre requests. A proposed Major Network Upgrade Fee would default to A$200,000 a megawatt in Sydney, Newcastle and Wollongong and A$100,000 a megawatt elsewhere. Another proposal would have data centres pay for the capacity made available to them whether or not they use it.
The state intends to make its regulations in the final quarter of 2026. They depend on the Electricity Infrastructure Investment Amendment Bill 2026, which passed the Legislative Assembly on 15 September and is awaiting its second reading in the Legislative Council. The commission has asked anyone who made a submission to the state to consider making one to the national process too, and says it will work with other jurisdictions so the reforms are "aligned and complementary".
Victoria and South Australia have their own cost rules
Since 1 July 2026, the Australian Energy Regulator's decisions on Victoria's five distribution networks have required data centres to pay their direct connection cost and part of the cost of the shared distribution network. The commission's paper notes that South Australia's Technical Regulator requires proposed data centres larger than 100MW to fund the network upgrades their load requires. Tasmania's draft expectations ask proponents to pay their fair share of network costs and all connection costs.
The commission weighs a pioneer scheme for shared upgrades
A data centre can pay to bring forward an upgrade of the shared network, and Bowen's request says the rules on how that works are unclear. But the developer that pays first carries costs that projects connecting later benefit from. The commission asks whether a pioneer scheme, in which later users repay part of the cost, would encourage more developers to fund upgrades themselves.
In Western Sydney, the next tranche of capacity depends on data centres funding upgrades. Transgrid, the NSW transmission network operator, has said about 2.8GW of further load could be supplied there if data centres fund a defined set of upgrades and committed battery storage goes ahead.
What to watch
The NSW bill. The Electricity Infrastructure Investment Amendment Bill 2026 needs to pass the Legislative Council before the state's regulations can be made.
Submissions to the commission. They close on 5 November 2026, and the commission publishes them, which will put operators' and networks' positions on the security threshold and the pioneer scheme on the record.
The Australian Energy Regulator's review. Energy ministers asked the regulator to review its distribution connection charge guidelines against the five expectations the Commonwealth set for data centre developers in March 2026, and the commission calls that review highly relevant.
Related rule changes. The commission links these requests to AEMO's proposal to give the market operator and networks better visibility of large loads, because connection pricing often depends on how a connecting party is registered. Ministers have also agreed to develop requests on data centre contracting obligations and faster connections.
National standards. The Department of the Prime Minister and Cabinet began consulting on 17 September 2026 on national AI standards that would require new data centres to "impose no net costs on consumers and communities". National Cabinet has separately agreed to develop mandatory data centre standards, which the Commonwealth intends to legislate in early 2027.
The draft decision. The commission's draft decision on both requests is due on 1 April 2027, and its project page lists 22 July 2027 for completion. Connection agreements signed before then will test how any new rules handle existing contracts.