Shock power bill jump to hammer households

Cost of living pressures are set to intensify as the regulator forecasts power bills will soar by up to 24 per cent from July 1 – but the government argues increases could have been worse.

The Australian Energy Regulator said the cost of generating electricity accounts for around 30-40 per cent of the total DMO price and it is the largest driver of increases in the offer in 2023-24.

Power bills for households will soar by hundreds of dollars a year from July 1, adding to soaring cost of living pressures as the regulator blamed supply challenges and volatility for the steep cost hit.

Customers in Victoria face a 30 per cent jump on ‘safety net’ prices while households in NSW, South Australia and southeast Queensland will see bills soar by up to 24 per cent.

Two separate draft default market offers – which puts a price cap on what retailers can charge customers who have not looked for a better deal and remain on standing offers – were released on Wednesday.

The Victorian ruling by the Essential Services Commission estimates power costs will jump by $426 for residential customers to $1829 a year while small businesses face bills surging by a third or $1738 a year to $7358.

Residential customers on standard retail plans in NSW, South Australia and southeast Queensland face a slug of 19.5 per cent to 23.7 per cent depending on the region and power use while small business customers face a rise of 14.7 per cent to 25.4 per cent.

NSW customers face a 22.2 per cent rise with South Australia up 21.8 per cent and south-east Queensland increasing by 19.8 per cent.

Some 600,000 households are still on the DMO in NSW, southeast Queensland and South Australia, with the whack adding to the pain of 10 ­successive interest rate rises and record inflation. The price jump follows an 18 per cent increase on the default market offer last year.

Energy Minister Chris Bowen suggested measures would be introduced in the May budget to help households.

“We know that every increase will still be tough for consumers and small businesses – and that’s why we will continue to work with the States and Territories to deliver energy bill relief in the May Budget. Russia’s invasion of Ukraine has seen energy costs skyrocket globally, and Australia has not been immune,” Mr Bowen said on Wednesday.

The industry including Origin Energy had predicted an increase of at least 20 per cent with the price hit signalling a volatile winter ahead for Australia’s under-pressure electricity market.

The Australian Energy Regulator said the cost of generating electricity accounts for around 30-40 per cent of the total DMO price and it is the largest driver of increases in the offer in 2023-24. noting the wholesale electricity market has faced unprecedented supply challenges and volatility.

“We know many households and businesses are already struggling with cost-of-living pressures. This is certainly a challenging environment for people to hear that further electricity price rises are on the horizon,” AER chair Clare Savage said.

“Energy prices are not immune from the significant challenges in the global economy right now; that’s why it’s more important than ever that we strike a balance in setting the DMO to protect consumers as well as allowing retailers to continue to recover their costs and innovate.“

A final decision on the bill slug will be decided in May, with new prices to apply from July 1.

Mr Bowen said the DMO showed that urgent Government action has helped to shield Australians from the worst energy price rises, but that further action will be critical to help households and businesses – including energy bill rebates.

He said the draft increases were up to 29 percentage points lower than the AER projected in late 2022, more than halving the increase that was expected before the government acted on skyrocketing coal and gas prices.

“This means hundreds of dollars (between $268 and $530) of additional increase avoided for households, and up to $1,243 additional increase avoided for small business customers.”

Originally published as Shock power bill jump to hammer households