Bills could rise by $50 to $75 to compensate electricity generators for crisis power

Households and businesses will bear the brunt of compensation payments to electricity generators for the unprecedented market suspension.

Households and businesses face up to $1.5bn in bill increases this year due to the emergency measures to keep the lights on.

The unprecedented suspension of the energy market after a winter cold snap has triggered compensation clauses for the electricity generators ordered to deliver power at a set price for almost two weeks.

Energy experts say the price the companies are paid for that crisis power was likely to be $1bn to $1.5bn, which when passed through on bills would average $50 to $75 for customers.

However, households and businesses that have high power use face a much bigger bill because costs are passed through based on consumption.

This has led one social services group to warn that large families will be particularly vulnerable to the new hip pocket pain and should be given assistance.

The market suspension was an unprecedented step to keep the lights on. Picture: Jason Edwards

Australian Industry Group energy specialist Tennant Reed said more bad news on the horizon.

“People are going to notice this, but to my mind that ($50-$75) number is not as big as what we are going to be paying over the next couple of years,” he said.

Mr Reed said futures markets showed soaring prices for power per megawatt hour, meaning retailers buying that electricity for customers would have to also put prices up.

“We are going to pay a lot more in aggregate for moderately higher prices sustained for years than we paid for super high prices for a couple of weeks,” he said.

St Vincent de Paul Society’s Gavin Dufty, said retailers were likely to pass costs on to the residential sector and those with high power use and no solar panels would suffer most.

“Large consumption households will bear the brunt of this and the Victorian Default Offer probably needs to be reviewed,” he said.

The triggered compensation clause could see generators given $1bn to $1.5bn. Picture: Andrew Henshaw

Mr Dufty said a $250 cost of living support payment soon available through the state government’s energy comparison website should be delivered straight to needy families.

“If the government wanted to support consumers during this cost of living crunch, they need to find a better way to deliver the $250, vulnerable people need money in their pocket not through a website.”

In briefings to stakeholders last week, the Australian Energy Market Operator flagged compensation costs but said it did not have a precise figure until claims were lodged by generators.

It has already said there would be a cost of more than $80 million for emergency reserves called upon in NSW and Queensland during the crisis, which will be part of the bigger bill.

The looming whack is on top of electricity price rises of at least $60 already locked in from July, and gas bill hits recently revealed by the Herald Sun of at least $150 per household.

A spokeswoman for energy minister Lily D’Ambrosio said the $250 Power Saving Bonus was available now for eligible concession card holders and from 1 July will be available to all Victorians “helping everyone find a better energy deal”.“Victorian households and businesses continue to be better protected from bill increases thanks to our nation leading investments in renewables - which delivers cheaper energy prices for Victorian households and businesses, while we work towards net-zero emissions by 2050.”