Average annual household bills will rise 25 per cent compared to last year

Energy bills are on the rise for thousands of Victorians, despite the federal government’s promise to slash power bills by $275 come 2025.

Victorian households on basic energy deals will see their bills soar by an average of $352 – or 25 per cent – next financial year, meaning the Albanese government’s ­promise to slash power bills by $275 come 2025 is all but torched.

An average family who owns a home is now facing a combined extra hip-pocket-hit of $5617 for mortgage repayments, groceries and electricity bills over the next 12 months, with social services groups warning that people will be forced to choose between eating and heating.

The state’s Essential Services Commission, which regulates the “default offer” safety net amount for people who don’t shop around, said its final decision, which kicks in from July 1, took into account the strain on households.

The hike means Victorian households now face an average increase from $1403 to $1755 next financial year.

Thousands of Victorians are facing major bill hikes. Picture: iStock

About 400,000 Victorian households have default offers, but they are also an ­important price-setting mechanism for other competitive deals provided by retailers.

Another 55,000 small business customers on default offers will also be hit with a 24.7 per cent hike, lifting bills by an average of $752 from $3039 to $3791 a year.

Even Victorian pensioners, single mums and other low-income households will still face 7 per cent more on their energy bills despite the relief announced for them in the federal budget and the Andrews government’s $250 bonus offer. This is despite Prime Minister Anthony Albanese promising 97 times before the election that he would cut power bills for families.

The price rise will add to inflationary pressure on the economy at a time when the Reserve Bank of Australia has hiked the cash rate 11 times.

The Albanese government’s ­promise to slash power bills by $275 come 2025 is all but torched. Picture: Martin Ollman

The ESC’s decision is slightly less than its draft offer released in March, which showed residential customers could expect to pay an average of $426 more from July 1.

The national energy regulator yesterday also revealed price hikes in other states such as Queensland, New South Wales and South Australia, with default deals rising by 21 per cent to 24 per cent depending on where people live.

Policy manager at St Vincent de Paul Society, Gavin Dufty, said the sector was fearful of big hip-pocket increases coming as “winter bites”.

“This is on top of broader cost-of-living pressure and will push some households into insidious decisions about whether to put food on the table or heat a room, pay for medication or not, and whether to renew home and car insurance,” he said.

“We strongly encourage households to contact their energy retailer if they have issues with their energy bill.”

Victorian Council of Social Service chief executive Emma King said the hike would still “increase poverty and hardship”, with people forced to choose “between heating and eating”.

“Affordable energy for heating, cooling, cooking and cleaning is critical for good health,” Ms King said.

“People turn up in hospital with hypothermia because they are so cold as they have not put the heater on, and some of those people die.”

Asked if Australians would ever pay less for electricity during this term than they were before the election, Energy Minister Chris Bowen said: “I will not walk away from efforts to reduce power prices by rolling out more renewable energy, because renewable energy is the cheapest form of energy”.

He said the federal government’s energy package had shielded more than five million households nationwide from the “worst of the impacts”, but he did anticipate more bill-relief would be needed in the future

Opposition energy spokesman Ted O’Brien said Victorian households were now set for more pain despite Labor’s promises to do the opposite.

“Hard-working, everyday Australians have been forgotten by Labor and they are the ones paying the price,” he said.

Opposition leader Peter Dutton said energy prices were rising as a result of Labor’s policies. “The likelihood of there being energy disruptions in our country is increasing every day and the energy regulator is pointing that out under the government‘s policies,” he said.

The national energy regulator put rising costs down to “stronger coal and gas costs”, “reliability issues with ageing coal-fired generation assets” and escalating outlays to cover days when rooftop solar isn’t producing. Last month’s closure of NSW’s Liddell Power Station was another factor.

The forecast bill pain will be partly offset for many lower income households by a federal government bill credit of $250 established in their last budget.

Small businesses will also get $325 in bill credits from the Commonwealth, with that bonus matched by every state in Australia other than Victoria.