Power customers face price hikes under regulator caps
Hundreds of thousands of households face power price hikes of up to 9 per cent as the energy regulator resets benchmark prices.
Caps on what regulators can charge households and businesses in South Australia, south-east Queensland, New South Wales and Victoria are refreshed every year.
Default market offers, as they are known, are updated annually to reflect the cost retailers are paying generators for electricity and to have it transported through poles and wires.
Safety net prices differ by region but residential electricity customers from NSW are on track for price rises of somewhere up to 8.9 per cent compared with the last financial year.
Customers in South Australia and south-east Queensland face smaller increases, of 3-6 per cent.
Inflation-adjusted annual price increases of between $60 and $140 can be anticipated, depending on the area.
Small business customers could face price gains of 4.2-8.2 per cent.
You might like
The Australian Energy Regulator, which sets default prices in those states, said higher wholesale market and network costs were contributing to the above-inflation jump.
Average wholesale market spot prices increased in 2024, driven by high demand, coal generator and network outages, and low solar and wind output that caused “high price events” in the relevant states.
“We’ve seen cost pressures across nearly every component of the default market offer,” AER chair Clare Savage said.
The regulator is expected to finalise the offer in May.
In Victoria, benchmark prices are set by a state-based regulator and residential customers can expect a $12 increase – less than 1 per cent – averaged across the five regions.
The state’s Essential Services Commission said some customers might find bills reduced by $19 but others faced a $68 hike, depending on location.
Small businesses on the Victorian default offer will have a 3 per cent price increase, or $104, on last year.
However, only customers who fail to shop around end up on retailers’ standard offers – hunting for better deals can help households and businesses beat power price hikes.
Stay informed, daily
Energy bill relief has further insulated households and businesses from price pain, with speculation the federal government will extend its subsidies in its budget planned for March 25.
Energy regulators kept default offers fairly stable last financial year. It was a welcome reprieve following sharp increases in the years prior, triggered by Russia’s invasion of Ukraine pushing up wholesale prices.
The Australian Council of Social Services said renters, people on income support or living with a disability or chronic medical condition were finding it particularly hard to pay their energy bills.
The council’s study, which surveyed more than 1000 people about their energy bills in December and January, found almost two in three Australians (64 per cent) were struggling to pay their bills, even though most from that group had tried to reduce their energy use.
ACOSS called for greater government support to upgrade social housing and provide bill relief.
Research by comparison website Compare the Market had a similar result, finding three-quarters of Australians it surveyed had been shocked by their energy bills in the past three months.
“We know that all Australian households received rebates to help keep energy bills down – some states more than others. But the reality is most homes have either chewed through the rebate or will only receive one or two more payments of $75 until the end of the financial year,” Compare the Market energy chief Meredith O’Brien said.
“In Brisbane, for example, where residents received a $1000 cost-of-living rebate as well as the $300 federal government rebate, the latest CPI data shows that electricity prices were up 219.8 per cent in the December quarter.
“If you’re in a part of Australia where you can compare and switch energy plans and you haven’t in more than a year, chances are you’re paying more than you need to for the same gas or electricity supply.”
O’Brien recommended looking for a “better offer” message on power bills. These are compulsory in all the affected regions and advise if a cheaper plan is available.
The draft energy proposals will be finalised sometime in May.
– with AAP
