Power bills look set to rise for many Australians from the start of July, based on a draft decision by key regulators.
But exactly how much bills will increase by depends on where you live and which energy provider you're with.
That's because of something called a "default market offer", which is set by regulators.
What's a default market offer?
It's the maximum price energy retailers can charge their customers who are on default contracts, or, as Australian Energy Regulator (AER) chairperson Clare Savage puts it, it's a "safety net price".
In states where there are multiple energy companies competing with each other to supply power to customers, they might offer a range of different contracts or plans for power prices.
This means there's no one set price for electricity in these areas.
So one customer might pay X amount for power during a particular time of day and Y amount for another timeslot, while another customer might just pay the same price for power regardless of the time.
Customers will typically go on a company's default plan unless they choose a different plan.
"[Default offers] tend to be the highest priced offers in the market," Ms Savage said.
"And tend to be paid by customers that have perhaps never shopped around or might have moved into a house and just used the default offer when they've moved in."
The AER and Victoria's Essential Services Commission are still at the draft stage, so they're not locked in just yet.
How much are prices going up?
This isn't set in stone yet, but here are the latest estimates for power bill increases to average households in each state and territory:
- New South Wales: About 21 to 22 per cent
- Queensland: There are two zones in the state. For the zone called South-East Queensland, increases are expected to be about 20 per cent. The rest of the state is called Regional Queensland, where typical residential customers are expected to pay between 11 and 29 per cent more
- South Australia: About 22 per cent
- Victoria: At least 30 per cent
But we don't have the estimates for these states and territories yet:
- ACT
- Northern Territory
- Tasmania
- Western Australia
That's because they're set by different bodies.
For example, the Western Australian government sets the state's prices, while ACT's Independent Competition and Regulatory Commission does that job for Canberra.
We'll get their figures in the coming months.
When will this kick in?
For most states and territories, prices won't rise until the next financial year.
That means prices will go up from July at the earliest.
Why are power prices going up?
The Grattan Institutes' deputy energy director Alison Reeve points out a few reasons:
- The war in Ukraine: "We are paying wartime prices for coal and gas now."
- Ageing coal-fired power plants: "There's decreased reliability, particularly of coal-fired power stations. So every time one of those drops out, we get a little jump in the wholesale price until it comes back online. So, you know, that decreased reliability as those plants age has also been impacting on prices for some time."
Will all prices go up?
It's "anyone's guess", Ms Reeve said.
Last year, prices in all states and territories went up, except for ACT.
"The ACT is a bit of an outlier here because of the ACT government's commitment to buying 100 per cent renewable energy for the whole of the territory," Ms Reeve said.
"ACT prices have actually been the only ones that haven't gone up because they haven't had the exposure to coal and gas prices."
What can the federal government do about this?
The federal government does not set the default market offer.
However, Ms Reeve said the federal government's caps on the price of gas and coal have had an impact — so extending them might help.
"The prices that we were seeing before the caps came in were a lot higher," she said.
"And, in fact, those prices started to moderate as soon as the government started to talk about putting the cap in.
"So really from October of last year, when they made that announcement in the budget, we started to see the wholesale prices going down.
"The thing is, though, that they haven't come back to where they were in January of last year.
"And the other thing is that a number of retailers would have written contracts with generators before the government made that intervention, and so they've contracted to buy energy at the high prices and that has to be factored into the default market offer."
What can I do about rising prices?
Ms Reeve has these three key tips for anyone worried about their power bills.
- Shop around: Depending on where you live, there may be different energy providers you can go with. Look for cheaper offers and be prepared to make the switch.
- Talk to your energy retailer: "They are required by law to help you if you are having trouble paying. That might mean that they help you establish a payment plan, they might be able to help you with ways to save energy around your house or put you on to a better deal."
- Look at ways to cut back on energy usage: Ms Reeve said there were many cheap ways to do this — like blocking drafts — as well as more costly options like opting for high-efficiency appliances where you can.
So it's a good idea to check what rate you're on — so have a look at your last bill.
The AER recommends customers go to energymadeeasy.gov.au "to compare their current offer to the reference price and shop around".
What can I do to save power?
Check your temperature settings
- Hot water systems: The federal government's recommended setting for thermostats is 60 degrees Celsius for storage hot water systems and no more than 50 degrees on continuous flow hot water systems.
- Air conditioners: The AER recommends keeping the temperature between 23 and 26 for cooling and between 18 and 21 degrees for heating.
- Washing machines: Use a cold water cycle or, if you must use hot water, keep it below 60 degrees. A hot cycle can use up to 10 times more energy than a cold wash.
Keep draughts out
Use door snakes to block gaps in entry ways and apply weather seals to doors, windows, skirting boards, skylights and cornices.
And close the doors to rooms you're not trying to cool (or heat).
Switch it up — or off
Replace your showerhead with a four-star-rated, water-efficient option.
That'll cut down on water heating costs because you're using less water, and as a bonus, it will cut down on your water bills. The federal government estimates a saving of around $315 a year for a family of four.
Go with energy-efficient LED light bulbs, which use around 80 per cent less energy than older-style ones.
Make sure you're turning off lights when you're not in the room.
And, when you're not using appliances such as washing machines, dishwashers, microwaves and even your TV, switch them off at the wall.
