Power bills will rise by hundreds of dollars across east coast

Households on the eastern seaboard will be hit with electricity bill increases of up to 25 per cent from July 1, adding to the mounting cost-of-living pressures facing Australian consumers.

The Australian Energy Regulator on Thursday locked in this year’s increases to default offers – price caps on what retailers can charge customers who don’t take up special deals – raising the limits by up to $349 in Queensland, up to $439 in South Australia, and up to $435 in NSW.

Power prices are set to increase for consumers in parts of Australia.Credit: Joe Armao

It means households will face standard electricity price rises of between 20.8 per cent and 23.9 per cent from July 1, depending on the region. Small business customers face bill hikes of 14.7 per cent to 28.9 per cent.

In Victoria, where the state’s Essential Services Commission sets its own default offer, prices for households will rise by 25 per cent, or $352 a year.

This year’s default offer changes reflect significant spikes in wholesale prices – what retailers pay for power before they sell it onto their customers – caused by a spate of problems across Australia’s ageing coal-fired power stations and coal mines last year curtailing supply, while the war in Ukraine was driving up the cost of additional coal and gas needed to plug shortfalls.

Default market offer increases will directly affect hundreds of thousands of households, but will also act as a reference point for retailers, such as AGL, Origin and EnergyAustralia, as they assess their next pricing hikes across their wider customer bases.

Australian Energy Regulator chair Clare Savage urged consumers to shop around for the best deal.Credit: Michael Quelch

Australian Energy Regulator chair Clare Savage said this year’s price rises were not as severe as they would have been if the Albanese government had not introduced emergency laws in December to temporarily cap the price of domestic gas at $12 a gigajoule and domestic coal at $125 a tonne.

Federal Climate Change and Energy Minister Chris Bowen said retail bills would have risen by up to 50 per cent without the government’s intervention.

“That’s why the government acted in December to cap coal and gas prices and why we worked with states and territories to deliver up to $3 billion in direct relief for the most vulnerable households and small businesses,” Bowen said.

Power industry representatives on Thursday welcomed the Australian Energy Regulator’s final determination, saying retailers were operating on “razor-thin” margins with little room to absorb higher wholesale costs, and it was critical that those costs could be recovered.

However, Australian Energy Council chief Sarah McNamara hit out at the Victorian regulator’s decision to allow just a 25 per cent increase, which was significantly less than the 31 per cent increase flagged in its draft ruling in March.

“While we understand the pressure to keep consumer prices as low as possible, it is also incumbent on the regulator to enable retailers, who are exposed to all market risks, to cover their costs,” McNamara said.

“The Victorian Default Offer announced today will hamper the ability of retailers to offer competitive market deals enjoyed by the majority of their customers.”

The federal government is providing power bill rebates worth up to $500 for eligible households and $650 for small businesses. The subsidies vary across the country because the federal government cut different deals with states and territories, who’ll also contribute by paying energy retailers to lower consumers’ bills.

Eligibility is limited to pensioners, veterans, seniors, concession card-holders and recipients of the Carer Allowance and Family Tax Benefit, as well as a range of existing state and territory concession schemes that already offer energy subsidies.

Savage said households and small businesses that were struggling with bills should contact their electricity retailer as soon as possible because the companies are compelled by the law to offer assistance.

“No one wants to see rising prices, and we recognise this is a difficult time,” Savage said. “That’s why it’s important for consumers to shop around for a better deal.”

Social services groups on Thursday said the looming price hikes would be a blow for people on the lowest incomes.

“The energy relief package announced in the federal budget, while welcome short-term relief, will barely cover last year’s electricity price increase let alone this year’s increase,” Australian Council of Social Services chief executive Cassandra Goldie said.

“Governments must step in to do more to provide income and debt relief now for people with the least and to prevent future price increases.”

Goldie called on the federal government to update the regulator’s guidelines to lower retail margins, lift JobSeeker payments to at least $76 a day and double the current levels of Commonwealth rent assistance to reduce rental stress.

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