Essential Services Commission locks in 7.8 per cent power price rise for 2020
Households are being urged to shop around for a better electricity deal after the state government’s default price was jacked up 7.8 per cent, with outages at coal-fired power stations and land tax blamed for the rise.
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Households are being urged to shop around for a better electricity deal after the default price brought in by the state government was jacked up 7.8 per cent for next year.
About 120,000 households on the default offer will pay an average of $1518 next year — a $110 increase — while small businesses face a $6404 hit.
The default offer was brought in by the government in July to ensure consumers stuck on outdated deals were switched to more competitive offers.
But St Vincent de Paul Society policy and research manager Gavin Dufty said the default offer was not the best price in the market, and that it had reduced the number of “deep discounts” and new products and services available to customers.
He said there had also been a reduction in the number of people shifting between retailers.
“People shouldn’t think it’s set and forget … There’ll be other deals out there which are better. Our concern is people will think it’s all taken care of,” he said.
Energy retailers are now also telling customers not to rely on the default offer.
“Our message is to stay on or switch to a market deal with your retailer rather than rely on the regulator setting the (Victorian default offer) because it will save you money,” Australian Energy Council chief Sarah McNamara said.
Households were paying an average of $1788 prior to the introduction of the default offer in July, which brought average bills down to $1408.
“There are better market offers available — but if a customer wants a ‘simple and reasonably priced’ option, they can trust the VDO,” commission chair Kate Symons said.
“We have set a price which reflects an independent and rigorous assessment of the efficient cost of selling electricity — a fair price, which is set by the regulator, not the retailer.”
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The commission’s decision concluded wholesale electricity prices and network costs — which make up about 75 per cent of power bills — had forced up retail prices.
It noted outages at Victoria’s coal-fired power stations and the Mortlake gas station were causing concern on the eve of summer, with drought conditions also impacting hydro storage levels.
“Over the past year, there have not been substantial changes in terms of supply and demand conditions particularly at times of peak demand,” the decision said.
“Longer-term weather forecasts for this summer are similar to last year. The combination of these factors results in a scenario where tight supply conditions are expected in the summer of 2020, with flow-on impacts for wholesale prices.”