Why this charge on energy bills keeps rising — before a light is even switched on

The annual cost you pay to transport energy around the grid is soaring – driving up bills before households even switch on a light.

The annual cost families pay to transport power around the grid has soared to $690 in some parts of Victoria – and the hefty network fees are “unlikely to come down any time soon”.

A new report on energy deals shows that overall, prices have fallen in the past year from previous eye-watering highs.

But the reduction in bills, which is largely due to wholesale prices easing, would have been bigger if not for rising network charges – the price we pay to transport energy to homes.

The annual St Vincent de Paul Society tariff tracker shows that price changes in the past year mean there are potential savings to be pocketed by switching to better deals, with families urged to check accounts to see if they could secure some pre-Christmas cost of living relief.

The report shows that the cost of default and competitive electricity deals decreased by between 6 and 8 per cent, over the past year.

Competitive or “market” gas deals also fell, by an average of 4 per cent depending on location, while less common default gas deals rose by between 3 and 16 per cent.

National director of energy policy and research at Vinnies, Gavin Dufty, said it was a mixed bag for consumers but the price we pay for big poles and wires and distribution to the home was “on the way up”.

The annual cost families pay to transport power around the grid has soared.

“There’s upward pressure on network prices because we are building more of it, and costs of building it and return on capital have gone up, because interest rates have gone up.”

“They are unlikely to come down any time soon.”

Billions of dollars are being spent upgrading high voltage towers and powerlines, with costs spread across all energy users.

In the past year, the Vinnies report, undertaken by Alviss Consulting, shows electricity network charges increased across the state, by between 3 and 16 per cent.

The proportion of bills now made up of those charges is as high as 36 per cent – or up to $690 a year for an average household in some parts of Victoria – for electricity, before a light is even switched on.

Electricity network charges have spiked by between 3 and 16 per cent. Picture: iStock

Gas distribution charges are a lower proportion of annual bills, at between $295 and $480 on average depending on the home’s location, but are also rising steadily.

Households can save up to $570 by switching from default or basic electricity deals to the best competitive offer in their area, while for gas the savings are up to $1890 for getting off default deals, but also as high as $870 just for switching to a better competitive deal.

“If you haven’t refreshed your account for a while, you are probably paying over the odds,” Mr Dufty said.

“If you get in now, before Christmas, that money you won’t be paying in January is a saving for when we are feeling the post-Christmas squeeze and the back to school costs are coming.”

Mr Dufty said anyone having problems paying electricity or gas bills should call their retailer who is “obliged to help” – and reminded families to check they were getting concession discounts if eligible.

Average dual-fuel homes in inner city suburbs such as Carlton, Fitzroy, Camberwell and South Yarra continue to have the lowest average bills at about $3670.

Households in the outer eastern suburbs and in eastern Victoria have the highest costs, with average dual-fuel bills at about $4130.