Electricity prices to fall in SA as regulator acts

Electricity prices will start to fall from July, in a draft ruling welcomed by residents and small business owners. See how much you will save.

Electricity prices for South Australian customers will start to fall from July, in a decision welcomed by the SA government.

The cuts of 2.5 per cent, or $57, for average households and 8.2 per cent, or $481, for small business were announced on Tuesday morning by the Australian Energy Regulator (AER).

Energy Minister Tom Koutsantonis praised the decision.

“We know consumers and small businesses have been feeling the impact of inflation and cost-of-living pressures, so these price cuts are welcomed because they show energy prices are going in the right direction,” he said.

“The regulator’s reasons for these cuts verify what we have been saying for the past two years – the global gas price shock from Russia’s invasion of Ukraine caused high power prices here.”

High Street Cafe owner Mick Beech - who has owned the small popular Kensington coffee spot for three years - said the increase to power prices since he started had hurt, but today’s announcement offered some relief.

“There has been times when just wages going up, fuel and the rest of it, it’s made it really tough for us to pay bills,” he said.

He described the price drop as a “light at the end of the tunnel.

Mr Beech said it was hoped the news would contribute in slowing down price rises of products by small businesses.

“As small business owner I really worry about our customers coming into the cafe and prices are slowly going up, not just because of power but lots of other things and customers are in a cost of a living crisis, and with this support, we can sort of keep our prices sort of stop them from going up even further.”

High Street Cafe owner Mick Beech speaking with Premier Peter Malinauskas about the announcement on Tuesday morning.. Picture: Dylan Hogarth

Premier Peter Malinauskas visited the cafe on Tuesday morning and said the regulators decision came at an important time.

“Household prices for the direct market offer are coming down by 2.5 per cent,” he said.

“That’s worth around about $50 to the household budget.”

He said for small business the cut was close to nine per cent, or “around about $500 decrease for the average small business and that’s a significant saving at a really important time”.

Australians have endured two years of price increases of more than 20 per cent amid a global energy crunch, which have fuelled inflation and forced the Reserve Bank to lift interest rates at a record pace.

It’s not just South Australia that will benefit – though the price changes will vary across Australia, with some Aussies set to experience an increase.

The AER proposed the default market tariff fall for the majority of Aussie households by between 0.4 per cent and 7.1 per cent from July 1, depending on where they live. The biggest falls will be seen across parts of NSW.

However, the AER said other households will see price increases of between 0.9 per cent and 2.7 per cent. Those experiencing the biggest price surges will be households in parts of Queensland.

AER chair Claire Savage said the differential was due to varying costs across transmission companies, but every effort had been made to cut as much as possible.

“While wholesale markets have stabilised since their extreme peaks of 2022, this easing has been offset by the pressures we are observing in network prices. Poles and wires costs are a large component of retail prices, comprising around 40 per cent of the price,” Ms Savage said.

The default market offer is a maximum price that retailers are allowed to charge, though they typically offer discounts against to entice new customers.

But retailers have long complained that the default market offer has not risen in line with their costs and so fewer and fewer discounts are being offered as companies move to recoup recent losses.

Just this week, the owner of a small SA business spoke of her struggle to keep the doors open as power prices continue to rise, saying “business is worse than it was during the pandemic.”

Natalie Siegele, the owner of Pulp & Thread – a cafe and fashion store on the main street of Tanunda – said she has been forced to unplug freezers due to soaring energy prices.

“It’s just getting tougher and tougher with rising costs,” she said.

“Our power bill the last two quarters has been over $5000 so we’ve had to unplug our display fridges, and a couple of freezers out the back.”

Ms Siegele said the power bill used to be close to $2000, but unplugging the extra fridges they now have hasn’t decreased the price that much.

“The jump is huge and it’s not just power, it’s gas as well,” she said.

“That’s up over $1500 a quarter as well … it’s just outrageous.

“It’s unrealistic to keep the cost that high.”

The default market offer is calculated annually, with the AER considering the wholesale cost of electricity, the toll of transporting electricity and the cost of compliance with government rules and regulations.