Millions of families are facing huge increases in their electricity bills this week as EnergyAustralia hits households with massive price rises after Australia’s energy market crisis.
Customers on variable rate plans across Queensland, New South Wales, the ACT and South Australia will see their bills rise by between 10.2 per cent and 14.1 per cent from Wednesday.
The hikes, which follow earlier increases in gas and electricity prices from other retailers, are the latest signs that pressure on Australia’s power markets are flowing through to family budgets.
The latest bill hikes from EnergyAustralia are out of cycle, meaning they aren’t being passed on when utility costs typically rise on January 1 or July 1.
Compare the Market’s general manager of energy Anthony Fleming said the increases amount to hundreds of dollars extra per year on utility bills.
“The harsh reality is that it’s costing more to generate the electricity we use to power our homes and businesses,” he said.
“Wholesale prices have increased due to supply issues, wild weather events, plant outages and the ongoing war in Ukraine, meaning electricity retailers are paying more for the electricity they sell.
“Customers on variable electricity plans with EnergyAustralia will start to feel the pinch of higher prices from March 1, but we know Origin has already upped prices for some customers and other retailers will be moving this year.”
Key decision looms
Further bill hikes could be coming on July 1 after the Australian Energy Regulator issues its determination for the federal Default Market Offer (DMO) in May.
The DMO works as a regulated price cap across NSW, Queensland and South Australia for those who don’t negotiate their electricity deals.
It’s similar to the Victorian Default Market Offer (VMO) available to Victorians – both offers are used by millions of Australians.
A draft ruling for the DMO due early next month will provide an early indication.
“[The federal] budget predicted electricity prices would soar by 30 per cent in the 2023-24 financial year, which could see hundreds added to electricity bills in the next year,” Mr Fleming said.
But Ariel Liebman, an energy market expert and director of the Monash Energy Institute, said there’s a chance the default offer may go down.
He said it’s “hard to predict” where the DMO will land, but that future wholesale energy costs are now trending down following earlier highs.
“The futures contracts currently appear to be tracking down after hitting the post-Russia invasion of Ukraine chaos,” he told TND.
“The current DMO and VDO in Victoria were a response to that, so I would strongly hope that the next DMO/VDO would see retail price benchmarks come back down.”
Easing the squeeze
There are some ways to escape the worst of the electricity bill squeeze.
There are ways to make your home more energy efficient so you’re using less power. You could also consider switching to solar, as explored here.
Beyond that, Compare The Market has put together a few additional tips to help families doing it tough.
