By Mike Foley
Households will be hit with higher-than-forecast power bills from July 1 after the market regulator handed down its latest round of annual price setting.
Price caps will rise for hundreds of thousands of customers by up to 9.7 per cent in the hardest-hit areas of NSW and up to 5 per cent in parts of Victoria.
Power prices will rise from July 1. Credit: Nine.
The price spikes have been driven by higher costs in the electricity grid over the past year, which in turn were due to breakdowns at coal-fired power plants, elevated fossil fuel prices and rising costs for network infrastructure.
However, Prime Minister Anthony Albanese is doubling down on his ambitious renewable energy plans, declaring it the cheapest new source of power, while the federal Coalition brawls over emissions targets and its commitment to build nuclear energy instead of wind and solar farms.
The Australian Energy Regulator on Monday morning revealed its final determination for so-called default offers – the maximum prices retailers can charge customers on standing power plans.
The Victorian average annual retail price from July 1 will be $1675. This is slightly more expensive than the $1655 price set for the previous 12 months.
In NSW, the prices vary significantly between the three electricity distribution networks across the state.
Ausgrid’s default price, covering much of Sydney and the Hunter region and Central Coast, will hit $1965 from July 1, up from $1810 in 2024-25. Endeavour Energy, in western Sydney, will rise from $2223 in 2024-25 to $2411. Essential Energy, in regional NSW, will rise from $2513 to $2741.
The Australian Energy Regulator released a draft decision on power price rises in March for consultation with power companies and other stakeholders.
Its prices have remained relatively stable, with the average default offer in Victoria rising $8 in the final determination. Essential Energy in regional NSW had the highest variation between the draft and final determination, with a rise of $28.
Price rises were attributed to a range of factors affecting renewable and fossil-fuel sources.
A significant driver of higher power prices, the regulator said, was breakdowns at coal-fired power plants, which require increased reliance on gas-fired power plants that draw on the highest cost fuel source.
Renewables were also a contributing factor, with rising infrastructure costs to pay for new transmission lines needed to link wind and solar farms to population centres, as well as stretches of low wind that forced increased reliance on fossil fuels.
Renewables now supply more than 40 per cent of the electricity in the grid, and the Albanese government is aiming to make it 82 per cent by 2030.
Albanese promised at the 2022 election that the green power shift would cut power bills by $275 by 2025.
However, bills have risen by up to $400 for some residents in NSW and up to $250 for some Victorians since the Labor federal government was elected.
Albanese said the renewables transition was an important element of the government’s plan to cut emissions to address the impact of climate change
“People who question the science need to look out their window,” Albanese said on Monday as he addressed media from the National Situation Room, where he was briefed on the impact of floods on the NSW Mid North Coast.
“We know the cheapest form of new energy is renewables, backed by gas, backed by batteries and backed by hydro for firming capacity.
“We’ve always had floods and droughts in Australia … but what we do know is that they are more frequent, and they are more intense.”
Prime Minister Anthony Albanese addresses the media at a press conference during a visit to the National Situation Room to receive an update on flooding in NSW.Credit: Alex Ellinghausen
The regulator’s chairwoman, Clare Savage, said customers could get better deals than the default offer by shopping around using the free, independent Energy Made Easy website.
Savage said while the cost of expanding electricity networks would contribute to higher bills over the coming 12 months, she expected the new infrastructure to help lower bills over the medium to long term.
“As we start to see increased use of the system, from increased demand, we should see that cost pressure in bills come down,” Savage said, noting the uptake of electric cars and appliances such as hot water heaters and reverse-cycle air-conditioners.
Energy Minister Chris Bowen announced in April that the government would offer another round of energy bill relief worth $150 for households, valid until the year’s end. Homeowners with solar panels can also save 30 per cent on a one-off home electric battery purchase, in a scheme to start on July 1.
“It’s clear energy bills for Australians remain too high, and we’re providing help for people doing it tough as we deliver longer-term reform,” Bowen said.
The default market offer operates as a price cap and offers up to 27 per cent cheaper are available, depending on location.
Bowen said about 80 per cent of households are not on the cheapest plan, and he encouraged people to visit the Energy Made Easy website or energy.gov.au.
Deputy opposition leader Ted O’Brien said on Monday that despite the government’s election win, its energy policy was failing to keep prices down.
“Prices remain too high and the pressure is mounting. Constant assurances of cheaper power from the Albanese government have not been borne out,” O’Brien said. “Australians are asking their government a simple question today: when will these price rises stop?”
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