AGL, EnergyAustralia and Origin Energy tipped to increase electricity bills by 15 per cent

A small household can expect its annual power bill to surge by nearly $200 per year from July due to soaring wholesale electricity prices.

Major power retailers such as AGL, EnergyAustralia and Origin are expected to increase bills by as much as 15 per cent or nearly $200 a year from July 1 after an explosion in wholesale electricity costs.

The forecast emerged after smaller providers dramatically ratcheted up their charges.

Leading energy market analyst Gavin Dufty of St Vincent de Paul said consumers should brace for bill increases of 10 to 15 per cent from the major retailers.

A 15 per cent increase would add $187 a year to the power bill of a small NSW household with consumption of about 4360 kilowatt hours annually, according to data from the Australian Energy Markets Commission.

Mr Dufty, who has been analysing the energy market since the 1990s, told The Daily Telegraph he believes “households should prepare for at least double digit percentage (jumps in) charges in electricity costs as we move forward”.

AGL is yet to reveal its power bill increases. Picture: Brendan Beckett

In NSW, AGL, EnergyAustralia and Origin control about 75 per cent of the market and are expected to announce their 2022-23 prices in mid-June.

Mr Dufty said a big factor in those retailers’ decisions would be the Australian Energy Regulator’s default market offer (DMO) decision, which is due to be made public next week following a delay.

The DMO is the market price cap. It also sets the level of costs that retailers can pass on to consumers and acts as the pricing reference point that must be used in tariff marketing.

Grattan Institute energy director Tony Wood, said the AER could take the unusual step of setting a DMO for six months only with an increase of about 10 per cent then revisit it at the end of the year.

“This is such an extraordinary situation that they could say to the federal energy Minister, whoever that is next week, ‘it would be bad if we put up prices too much. Why don’t we have a compromise?’,” Mr Wood said.

While the majors are yet to show their hand, some smaller providers have been forced to substantially raise charges.

Wholesale power prices have surged, particularly in NSW. Picture: Sean Gallup, Getty Images

North Sydney based Discover Energy this week wrote to customers to warn that prices in peak usage periods would increase by 80 per cent, while off-peak rates are being jacked up by 130 per cent.

The daily supply fee – which is the other component in a bill – is also increasing, by 45 per cent.

Discover Energy co-founder and co-CEO Jeff Yu said: “At a time when consumers are already feeling the pinch around the rising cost of living, this issue needs to be addressed. We’re calling on the Government to look at ways to subsidise and stabilise these unsustainable wholesale energy costs in a similar way that they have for motorists at the pump. As soon as prices are reduced, our customers can rest assured that we will pass on those reductions.”

Meanwhile Mojo has told some NSW customers that usage rates would rise by 58 per cent but the daily supply charge would drop by 29 per cent.

Power bill expert Joel Gibson of One Big Switch said: “We’re going to see more and more price hikes over the coming weeks and we can only hope they’re not all at this level.”

Mojo was contacted prior to publication.

In a blog on its site, the company said “with the demand and supply of coal in Australia being out of whack the wholesale price of energy has skyrocketed.

“Since January, even last year, the price of electricity has been steadily going up in leaps and bounds. We are talking about an increase of 200 per cent in Queensland, NSW and Victoria,” Mojo said.

“Small energy retailers are largely at the mercy of buying from the grid. The result of all of this is that energy retailers who don’t own their own generating assets or have contracted operating assets, are paying extremely high prices.”

AGL, Origin and EnergyAustralia do own generation assets, which may partially insulate their customers from price rises. Also, the trio’s prices are typically higher than minnows who are trying to win customers with cheap offers.

Both these factors mean the majors’ bill hikes may not be as large, in percentage terms, as those of smaller players.

Demand for power is outstripping supply during weekday mornings and evenings.

What’s more, the full effect of earlier “significant” wholesale cost reductions during the past three years has not flown through to consumers, a spokesman for federal Energy Minister Angus Taylor said.

“We will be watching the energy companies closely, and our big stick legislation is there to ensure this happens,” Mr Taylor’s spokesman said.

The ‘big stick’ legislation — also known as the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019 — carries penalties ranging from public warnings to court-ordered fines and forced divestment.

Messrs Dufty and Gibson both predicted some retailers would go out of business.

“The question is how many,” Mr Gibson said.

In the UK, steep price rises have forced more than 30 retailers to shut down.

Mr Taylor’s spokesman and Mr Gibson urged consumers to shop around to find a cheaper tariff.

The federal government operates a comprehensive comparison site at energymadeeasy.gov.au.