Relief at last for households struggling with power bills

Contrary to experts’ predictions, next to no one will pay more for power next financial year and some households will save hundreds of dollars.

Exclusive: Practically no one will pay more for power next financial year — contrary to experts’ predictions.

And some Victorian households will save as much as $1500 while the reductions will reach $500 in NSW, South Australia and southeast Queensland.

Leading figures in the energy sector had warned that big electricity companies would recoup losses from a new ban on high charges by pushing up their lower rates.

But reports of the death of discounting are greatly exaggerated.

News Corp Australia can reveal AGL will join fellow retailing giant Origin in leaving cheap rates untouched from July 1, even though the introduction of price caps will see them face a combined revenue hit of more than $100 million a year.

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Some households will save hundreds of dollars under the AGL and Origin decision to leave cheap rates untouched. Picture: iStock

Their actions are expected to strongly influence what other retailers do.

“This looks like the first time in years that the majority of households won’t get a power bill price rise on July 1, and that’s great news,” said One Big Switch campaign director Joel Gibson.

The decisions by the two largest retailers to keep discounted charges where they are flies in the face of forecasts by the likes of Australian Energy Market Commission chairman John Pierce.

He wrote to energy ministers last year saying “retailers would attempt to recover lost revenue (from a price cap) by increasing prices for their other customers, or at least in the short term, withdrawing their lower priced market offers”.

However today an AEMC spokeswoman said “the impact a single policy or a single change in market conditions may not be as observable in the short term”.

From next month, the one in five people who have never shopped around for a better electricity deal will be automatically moved from high-priced standing offers to lower-priced “default market offers” or DMOs.

Nearly no one will pay more for power next financial year.

The Federal Government is responsible for these changes in NSW, Queensland and South Australia, while the Andrews Government has set its own “Victorian default offer” (VDO).

Households on the highest priced standing offers in Sydney will save up to $500 annually by being shifted to the DMO, figures published by the Australian Energy Regulator show.

The more typical saving will be between $125 and $175.

In the rest of NSW, the biggest savings for those who are automatically moved will be nearly $500 and the median cost reduction will be $180.

In southeast Queensland, the largest saving will be $500 and the median reduction will be $120.

In SA, the biggest saving will be nearly $500 while the typical reduction will be $170.

In Victoria, some customers could save up to $1500, Essential Services Commission figures show.

The median reduction is estimated to be between $310 and $450, depending on which of the five distribution zones a customer is in.

These changes have no impact on the millions of householders who have shopped around and then taken up a market offer.

Origin and AGL’s actions are expected to influence what other retailers do.

“So people who have always been savvy need to keep on paying attention,” said Canstar’s Simon Downes.

He said by finding the cheapest deal it was possible to save $300 annually in NSW, Queensland or SA compared to the DMO.

In Victoria, some market offers were between $200 and $300 cheaper than the VDO, which Mr Downes said had been set very low.

Origin has said the DMO will cost it $44 million while the VDO will shave a further $20 million.

It is the largest retailer, with 20 per cent of the market, according to IbisWorld.

AGL, which is number two with 12 per cent, has not said what the effect of re-regulation will be on its finances but there are estimates that it will be greater than the impact on Origin.

The third-ranked retailer EnergyAustralia declined to comment, nor did Federal Energy Minister Angus Taylor.

Ian Marr with kids Connor, 10, and Lily, 7, at home in Rouse Hill, today. Picture: Justin Lloyd.

Switched on to savings

With three fridges, two kids and a pool, Ian Marr needs to be looking for low power prices.

But he says the new default market offer (DMO) being imposed by the Federal Government isn’t the best deal around.

And he’s right, because the DMO by definition is set halfway between a group of low “market” prices and higher “standing” offers.

So it’s better to be on one of those low market prices.

Any household on a high standing offer — because they have never shopped around for their electricity — will be auto-switched to the better-priced DMO on July 1.

Across NSW, southeast Queensland and South Australia that’s about 780,000 households.

But millions of other households still have to take responsibility for their bills.

Mr Marr, of Rouse Hill in northwest Sydney, has done so by, for example, installing solar and using it to run his power-hungry pool pump.

He’s also taken up a market offer arranged by One Big Switch that boasted low rates and extra savings for paying on time, which Mr Marr always does.

Mr Marr said people didn’t have to rely on the government to tackle high power prices for them. It was just a matter of being vigilant.

“Always look for a better deal if you really want to save money,” Mr Marr said.

* The owner of this masthead, News Corp Australia, is a shareholder of One Big Switch.

Originally published as Relief at last for households struggling with power bills