Another blow as Aussies set to pay more on power bills
Cash-strapped Aussie households will soon face even higher electricity costs as a lifeline for many comes to an end.
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Cash-strapped households could soon face even higher electricity costs as data shows about half of Australians have been skipping essential expenses to cover their power bill.
Millions of households could be paying more on their electricity under a new proposal by the regulator.
The Australian Energy Regulator (AER) has released its latest default market offer (DMO) draft determination, which is the maximum households living in NSW, South Australia and South East Queensland will be paying.
Under the draft, households power bills could rise between 2.5 and 8.9 per cent depending on where a person lives.
Small business customers could see rises between 4.2 and 8.2 per cent.
AER chair Clare Savage said it remained a challenging time for energy consumers, particularly those impacted by Tropical Cyclone Alfred.
“We know that cost-of-living pressures are front of mind for many households and small businesses,” she said.
“We’ve seen cost pressures across nearly every component of the default market offer, and we have given careful scrutiny to ensure prices are a reasonable reflection of the costs of a retailer to supply electricity,” Ms Savage said.
Energy Consumers Australia chief executive Brendan French said the group was disappointed about the latest price hike.
“The DMO exists to protect people, particularly those in vulnerable circumstances, from paying disproportionately high electricity prices. It’s not working effectively if it is priced up to 25 per cent above more competitive offers,” Dr French said.
The AER is in a difficult spot because there is continued wholesale volatility and network costs keep going up.
“But we will continue to encourage the AER to do everything possible to ensure that networks are operating at lowest cost and also that the retail component of the DMO eliminates unnecessary marketing and other elements,” Dr French said.
The Essential Services Commission (ESC) also handed down its draft decision on its recommended increase to the Victorian default offer (VDO) on Thursday.
The commission recommended average annual electricity costs rise from $1655 to $1667, or by 0.72 per cent, for customers with a yearly usage of 4000kWh, the average across the state.
Under the ESC proposal, some Victorians’ electricity bills will drop by $19, while others will increase by up to $68 depending on what zone a household falls into.
Businesses are tipped to pay 3 per cent more on average.
Similar to the reference price used in other states, the VDO is designed to act as a safeguard for Victorians on “standing offer” contracts with their electricity provider and protect customers with capped and competitive prices.
About 337,000 households and 56,000 small businesses are covered by the VDO, which also sets the maximum price homes and businesses within an embedded network pay.
Australian Council of Social Service chief executive Cassandra Goldie said the organisation’s research showed half of Australians were skipping food, medication or other essential bills to pay off their electricity bills.
“It’s a complete travesty that in one of the world’s wealthiest nations, people are getting sick, skipping meals and delaying medical appointments because they can’t afford to cool and power their homes,” Dr Goldie said.
The rise in electricity prices follows two sharp price hikes of almost 40 per cent in the 2022-23 and 2023-24 financial years before prices stalled in 2024-25.
Electricity prices fell by 9.9 per cent in the December quarter and 25.2 per cent year-on-year, according to the Australian Bureau of Statistics.
This drop was on the back of rebates from state and federal governments, without which electricity prices would instead have risen by 0.2 per cent in December.
The federal government provided $3.5bn in energy bill relief, with every household receiving a $300 rebate on its electricity in $75 quarterly payments. Eligible small businesses received a $325 rebate.
Both of these are slated to end on April 1.
Canstar Blue research shows 50 per cent of Aussies think the $300 government rebate should continue, while a further 34 per cent think support should continue but be means tested.
Canstar Blue data and insights director Sally Tindall said it was no surprise Aussies wanted more help as the last round of rebates were set to be removed.
“Tally up your monthly savings and put that extra cash in a safe, warm place ready for when the reality of your real electricity bill bites,” she said.
Ms Tindall said many Australians could be overpaying on their electricity prices, as staying with a provider often meant higher prices.
According to Canstar Blue, Sydney-based households could save up to $386 a year by switching from the average-priced plan to one of the cheapest, while a typical household in Melbourne or Brisbane could save $319 and $445 respectively – potentially $145 more than the total federal rebate being offered.
“If the government does end up extending the electricity olive branch, don’t shy away from switching to a better energy deal – there’s plenty of other places in the budget that could benefit from the extra cash,” Ms Tindall said.
Originally published as Another blow as Aussies set to pay more on power bills
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