Discover Energy double-whammies power price hikes for households

Customers of a Sydney electricity company are set for a shock to their wallets, with the retailer announcing a second huge spike in prices. See how it will affect you.

In a concerning sign for competition in the power market, a previously cheap electricity retailer has hit thousands of customers with a double-whammy of hikes — adding to as much as 285 per cent — inside the space of a fortnight.

North Sydney-based Discover Energy last week hiked rates by up to 130 per cent.

Now it has told some of these customers to expect a further increase of as much as 67 per cent.

The combined effect is a price surge of up to 285 per cent, said One Big Switch’s Joel Gibson, who brought the increases to light.

Discover told The Daily Telegraph it was also helping customers to find “alternative providers”.

One Big Switch’s Mr Gibson said: “These are the biggest price hikes we’ve ever seen in Australia. This is also the third retailer we’ve seen encouraging customers to leave, which we’ve never seen before.”

Electric bill

Meanwhile, electricity bills in Western Sydney, the Southern Highlands, Blue Mountains and parts of the south coast will rise by 14 per cent or about $230 a year from July for many tens of thousands of households that have never shopped around.

Meanwhile thousands of small business owners in these areas who haven’t hunted down a cheaper deal will be hit with a hike of nearly 20 per cent, adding $1130 annually.

Joel Gibson, One Big Switch spokesman.

These increases, in what is known as the Endeavour distribution zone, are the steepest among the new Default Market Offers announced by the Australian Energy Regulator on Thursday morning.

The Endeavour price hikes are driven by surging wholesale energy costs — due to power generators paying more for coal and gas — as well as bushfire expenses and a requirement to reconcile revenue shortfalls after lower usage during the pandemic.

The DMO is the price paid by about 10 per cent or 330,000 NSW households and 18 per cent (57,000) small businesses that have not hunted down a cheaper tariff either with their own retailer or a competitor.

The price of staying warm in winter is about to surge. Picture: Chris Kidd

It acts as a price cap to ensure these customers are not rorted.

In the Ausgrid area, covering the eastern half of Sydney, Hunter, Central Coast and Hunter, the DMO will go up by 8.5 per cent, or about $120, while small businesses face a jump of 10 per cent or $690.

For the rest of the state, which is the Essential distribution zone, the DMO will rise by nearly 10 per cent or $185 a year for households and about 15 per cent for small businesses, which would be an extra slug of $1150.

The biggest factor in the Ausgrid and Essential increases was surging wholesale energy costs.

AER chair Clare Savage said after two years of DMO reductions, setting the prices for 2022-23 had been “such a difficult decision”.

As tough as it must have been, given cost of living pressures are already high, the AER still saw fit to allow retailers to reap margins of as much as 25 per cent from some NSW customers.

The sun is setting on power price reductions.

These margins will be brought down over the next three years, Ms Savage said.

She urged any customer who felt they couldn’t pay their bill to get in touch with their retailer.

Help available included financial counselling, concessions, energy usage audits and payment plans.

“We don’t want to see people going without energy or not using their heaters,” Ms Savage said.

Rates paid by customers not on the DMO were also likely to go up, she said.

“What you can take from this decision is that there have been some significant increases in the costs that retailers face so you would expect to see market offers rise but by how much we don’t know until they put out their prices,” Ms Savage said.

The energy market is going through a rapid transition. Picture: Fabrini Coffrini

The big retailers — AGL, EnergyAustralia and Origin — are likely to reveal their price changes in June.

Ms Savage recommended using the federal government’s free comparison site, energymadeeasy.gov.au, to find a cheaper rate.

For households, there are deals as much as $600 a year cheaper than the DMO, according to the AER; businesses can cut their costs by up to $1770.

From next year, retailers will be required to disclose on bills the cheapest offer they have for that customer.

On Thursday night NSW Treasurer Matt Kean announced that households under financial hardship would be able to access $400 in vouchers to help with energy costs under an increase to the state’s Energy Accounts Payment Assistance program.

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