Anthony Albanese faces first major hurdle as power bills set to surge

Anthony Albanese is facing his first major hurdle as Prime Minister after a major decision that will affect the bottom line of every Australian.

Anthony Albanese is facing his first major hurdle as Prime Minister as Australian electricity prices are expected to surge in his first few months in office – with warnings meat, fruit and vegetables could follow suit because of rising petrol prices.

Labor ran on a platform of tackling the cost of living “crisis” that they said had spiralled on Scott Morrison’s watch.

The pain is about to get worse for Aussie households with the national regulator announcing rises of up to 18 per cent on power bills, coming into effect from July.

In NSW, customers will see price rises between 8.5-18.3 per cent, up to 12.6 per cent in southeast Queensland and 9.5 per cent in South Australia.

The increases will add more than $250 a year to bills in some cases, based on Australian Competition and Consumer Commission (ACCC) figures, putting the average residential electricity bill at $1434 per year.

It means NSW customers will pay between $119 and $227 more on their power bills next financial year, southeast Queensland households an extra $165 for 2022-23 and South Australia $124 more than last year, depending on usage.

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The average residential electricity bill is expected to hit $1434.

The newly sworn in Labor government has blamed the Coalition for the “bad news”, with Chris Bowen arguing “higher energy prices are very much the Liberal legacy”.

“Nine years of delay and denial comes at a cost, and this cost is being paid by Australians,” he said. “Tragically today, this cost will be borne by Australian households.”

He said the Albanese Government aimed to transform the energy grid to 82 per cent renewables by the end of the decade.

“The good news is that the Australian Government will now have a policy to see power prices fall through investments in renewable energy, the cheapest form of energy. That’s the better news for the Australian people,” Mr Bowen said.

Wayne Swan, National President of the Labor Party, said the challenges the Government is facing have developed over a long period of time.

“We haven’t invested in new power generation particularly nuclear energy,” he told Today. “The prime cause is failure to invest in renewables, but there are international factors that mean prices have increased.

“This has been made worse by what has happened in the Ukraine, but the only solution in the end is investment in renewables which is the policy that the Albanese Government took to this election.”

Why power bills are going up

The Australian Energy Regulator (AER), which waved through the price rise overnight, said this year’s determination was a “particularly difficult decision” as the regulator sought to balance the additional cost pressures on consumers with ensuring retailers could recover their rising wholesale and network costs.

Anthony Albanese has vowed to bring the cost of living down. Picture: John Grainger

“In setting these new prices, we understand the significant impact they will have on some consumers who may already be struggling with cost of living pressures,” AER chair Clare Savage said.

“We have given scrutiny to all factors affecting the calculation and have set safety net prices that reflect the current conditions and underlying costs to retailers.”

In response the body said it decided to lift “default market offers (DMO)” – which is the safety net price cap that ensures consumers are protected from unjustifiably high prices.

“Setting the DMO is not about setting the lowest price. We are required to set a price that will allow retailers to recover their costs, earn a reasonable margin and support retailers to compete and offer better deals and products in a competitive retail environment,” Ms Savage said.

“If a large number of retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers.”

NSW offers $1600 a year to help with bills

In response to rising bills, the NSW Government is expected to offer cash to eligible households.

Households experiencing difficulty paying their energy bills will be able to access up to $1600 a year in support payments from next week, NSW Treasurer and Energy Minister Matt Kean said on Thursday.

Eligible customers can receive assistance of up to $400 per application for electricity and up to $400 per application for gas bills twice a year.

Meat and sauce prices to spike

It’s not just our bills that will rise in the coming months. Meat, fruit, vegetables and even things like tomato sauce could follow suit due to rising petrol prices.

Prices of groceries are also tipped to soar as the cost of living crisis hits Aussies hard.

Energy and industry experts are warning of a “rough few years” of high prices due to the lingering impacts of the war in Ukraine.

Energy Users Association of Australia chief executive Andrew Richards told the Herald Sun companies that were not trade-exposed would have to lift prices when they get new gas contracts.

“Higher energy costs will continue to feed higher cost of living, and inflation, for some time to come,” he said. “For food processing industries, we are starting to see those increased costs reflected in the supermarket – processed vegetables, meat, tomato sauce. They use gas to heat a lot of water to create steam, used for sterilising.”

Originally published as Anthony Albanese faces first major hurdle as power bills set to surge