Energy vampires: Australian households being ‘ripped off’

As more and more households fall behind on their utility bills, energy giants are “ripping off” millions of Aussies each year, new research has found. See how.

EXCLUSIVE

Big energy companies are “ripping off” households by creaming as much as $750 a year from each electricity account and $400 annually on gas, according to new research from a top think tank.

The startling findings from The Australia Institute emerge as more and more consumers fall behind on their utilities bills despite governments spending billions of taxpayer funds on rebates.

Institute senior research fellow David Richardson told this masthead that his analysis showed AGL and Origin — the two companies he investigated — were making increasingly large sums of money from their customers.

“Australians are absolutely being ripped off,” Mr Richardson said in an interview.

His research, which the energy companies dispute, shows the average AGL electricity consumer contributes $755 to its earnings. At Origin the comparable figure is $595, according to Mr Richardson.

Origin’s net profit rose 60 per cent to $1.18 billion in 2023-24 on soaring electricity margins. Its earnings before interest, tax and other items jumped by 14 per cent to $3.5bn.

Origin’s CEO Frank Calabria was paid $5.6 million last financial year. Picture: Britta Campion / The Australian

Origin’s CEO Frank Calabria was paid $5.6 million last financial year, up $700,000 on 2022-23.

AGL’s underlying profit surged by about 190 per cent in 2023-24 to $812m. Its earnings before tax and other items rose by 63 per cent to $2.2bn.

AGL’s CEO Damien Nicks was paid $2.3m last financial year. He was appointed part-way through 2022-23, so a percentage increase in pay cannot be calculated.

AGL’s CEO Damien Nicks was paid $2.3m last financial year. Picture: Britta Campion / The Australian

“It’s about time these people are accountable,” the Australia Institute’s Mr Richardson said.

As prices, profits and paypackets soar, Anthony Albanese is spending $3.5bn of public money on rebates this financial year, on top of billions provided in 2023-24, in partnership with states.

The rebates have been paid after Federal Labor promised to lower electricity bills by $275 by 2025, only for costs to rise by far more.

The former Queensland Labor government also approved a $1000 subsidy this financial year – before it lost power at the October state election.

Mr Richardson asserts AGL is making $414 a year per gas customer while Origin is earning $418.

He claims AGL charges households three times as much as businesses per gigajoule of gas and that Origin charges 2.5 times. For electricity, the two companies charge households twice what businesses pay.

Network costs associated with distributing both forms of energy to households accounts are not large enough to explain the difference, according to Mr Richardson.

“It is difficult to avoid the conclusion that AGL and Origin are ripping off Australian consumers through price gouging,” he said at the end of his new report.

Origin, which has about 4m customer accounts, said the Australian Competition and Consumer Commission had found that in 2022-23 “energy retailers recorded an average margin of $34 per year per residential customer.”

Origin added that “any attempt to make direct comparisons between commercial and residential customer prices is meaningless given there are fundamental differences in the input costs and the nature of contracts with those customers.”

AGL, which also has about 4m accounts, said its “large business customers are provided bespoke pricing based on their individual customer profile.

“The energy consumption of different businesses varies significantly when compared to residential customers.

“While there has been an easing of wholesale electricity prices from the extreme peaks of 2022 during the energy crisis, there has been marked increases to network costs,” AGL said.

“Network costs are associated with the distribution and transmission of electricity to customers and can generally represent more than 40 per cent of a customer’s bill.”

St Vincent de Paul energy policy expert Gavin Dufty said there were several ways consumers could fight back.

“Just leave – that means they are not taking money out of your pocket,” Mr Dufty said.

“Jump on the government comparison website Energy Made Easy, shop around and get a better deal,” he added.

Invest in solar if you can afford it, Mr Dufty suggested and if you are a concession card holder, make sure you are getting any additional rebates.

The Australian Energy Regulator last week said 1.9 per cent of customers were on hardship payment plans as of June 30, up from the 1.4 per cent record a year earlier.

Originally published as Energy vampires: Australian households being ‘ripped off’