Power bill rebates negotiated as steep Victorian annual price rises predicted
John Pesutto has called on Dan Andrews to explain why Victorians are paying more for energy than other states as steep power bill price rises get set to hit.
Victoria
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Opposition Leader John Pesutto has demanded Daniel Andrews explain why Victorians are paying more for energy prices than other states.
It comes after revelations hundreds of thousands of Victorian households will be hit with a $426 rise in their power bills from July 1.
The Essential Services Commission on Wednesday released its draft Victorian Default Offer, which shows average annual bills will rise 31.1 per cent compared to last year.
This means 400,000 residential customers can expect their bills to rise from $1403 to about $1829 a year.
At least 55,000 small business customers will also face a $1738 hike, with average annual bills to increase 33.2 per cent from $5620 to $7358.
The Victorian Default Offer sets a maximum price that customers who are not on market contracts can be charged for electricity.
“The proposed increases to the Victorian Default Offer reflect a year of price volatility in the energy market, which is making it more expensive for energy companies to buy and supply electricity across Australia,” Commission chairwoman Kate Symons said.
“The dollar figure increases set out in the draft decision are in keeping with proposed default market offer increases announced in other jurisdictions today.
“We understand the impacts on consumers amid a broader environment of cost-of-living concerns and we urge Victorians to take advantage of government support programs offering power price relief.”
On Wednesday, Mr Pesutto said: “Four years ago, Daniel Andrews promised Victorians that he would reduce power prices through a default market offer. Well today, he’s broken his promise, and he owes Victorians an explanation”.
Mr Pesutto conceded while the government’s $250 power saving bonus may help struggling families and businesses “a little”, he said constant handouts were not a substitute for a “structured, sensible plan to transition Victoria to renewables”.
“We have a hodgepodge of policies and thought bubbles that are not going to lead Victoria to net zero emissions and are going to see Victorian families and businesses simply pay more,” he said.
“We won’t oppose an ongoing bonus but what we think is more important is that the Andrews Labor government actually gets the system and policy right.
“If they’re needing to use bonuses repeatedly, it says that its own plan to … guarantee supply and to make sure prices are affordable are not being achieved.”
The next round of one-off power saving payments opens on March 24.
St Vincent de Paul Society policy manager Gavin Dufty said the “kick in the hip pocket” to all households signalled that families with gas and electricity were facing a $1000 bill hike this year.
He said retailers were obliged to help struggling families to offer support, and should check eligibility for concession rates and “shop around” for better deals.
This includes by getting on to the government’s energy compare website, where $250 would be available later in the month for any household that checks for better offers.
“This is a real kick in the hip pocket for all households and signals increased for electricity market offers – for a dual fuel household this signals increases of $1000 a year factoring in gas price increases earlier this year,” he said.
“We are calling on the state government to have a targeted winter energy relief package to coincide with when the bill start to bite, after June.”
Senior Labor Minister Natalie Hutchins on Wednesday said while the initiative may not “fix” the problem, it will help “ease the burden” on families.
“We understand that the cost of living pressures are very real for so many families here in Victoria, but those rates are set by the Essential Services Commission – an independent authority – but of course we recognise that there are additional pressures financially on families and that’s why we have the $250 power saving bonus,” Ms Hutchins said.
“That’s available, that has rolled out twice already in the last 12 months and will be available again from the 24th of March onwards. “
Ms Hutchins did not say if the government would commit to another round of bonuses when power bills rise in July.
“I’m not going to pre-empt any announcements out of the state budget, but certainly, we will be doing what we can to support Victorian families … we know electricity is one of those,” she said.
“But the really important commitment that our government has made is investment in the SEC (State Electricity Commission) and we’ll continue to step up that policy and roll that out.”
Ms Hutchins said the federal government would be “a natural partner” when it comes to funding the SEC.
Federal Energy Minister Chris Bowen acknowledged the increases were “big” and would “hurt many families”.
But Mr Bowen said these increases would have been “much, much higher” if the Albanese government hadn’t intervened and introduced price caps on coal and gas.
“There is more relief yet to flow,” he said.
“The Treasurer, Dr Chalmers, is negotiating with all of his state and territory colleagues, the rebates that will be in the federal budget.
“Those rebates will provide further relief over and above the package of interventions that we announced last year.”
Energy Consumers Australia chief executive Lynne Gallagher said the latest rise was another blow for consumers already struggling with cost-of living pressures.
“There are things governments and retailers can do now and we’re calling on them to explore every possible option,” she said.
“We know that as many as half of households could be missing out on assistance that they are eligible for, often because of red tape.
“Retailers know when customers are not on the best deal and we’d like them to be more proactive in reaching out to offer them the best possible option.”
The massive rise in power bills from July 1 was driven by soaring wholesale prices, as well as the costs associated with the national market operator’s extraordinary intervention last year to keep the lights amid a perfect storm of events.
In a bid to reduce volatility, AEMO suspended the wholesale market, introduced a price cap and told generators to supply as required – promising they would be compensated.
Australian Energy Council chief executive Sarah McNamara said higher wholesale prices have left no room for retailers to absorb costs and the draft decision reflects those pressures.
“Retail businesses are already dealing with razor-thin margins, and it is critical that the
regulated price is set at a level that allows them to recover their costs,” she said.
“Failing retailers would be a worst-case scenario for everyone.”
The Australian Energy Regulator on Wednesday also released the Default Market Offer for Queensland, South Australia and New South Wales.
Households are set to face rises of between 19.5 per cent to 23.7 per cent depending on the region.
Small business customers are also staring down increases of between 14.7 per cent to 25.4 per cent.
“It’s important to understand that the DMO is not the best offer, it is a safety-net,” AER chair Clare Savage said.
“We encourage consumers to shop around for the best electricity deal for your circumstances.”
A final decision on the offers is due around May before the prices come into effect from July 1.
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