As young Australians continue to feel the strain of an ongoing cost of living crisis, the news of more bills going up is probably another dire hit to your wallet. So, with electricity price increases announced for multiple states from July, you’re probably left wondering what this means for you.
Will your bills go through the roof? Are any relief like rebates in sight? How are the major parties planning to address these increases? We’ve got you covered.
Why are energy prices going up?
Energy prices are set to rise due to an increase in the so-called default market offer, otherwise known as the DMO. The Australian Energy Regulator (AER) sets the DMO for all states and territories, based on the costs retailers face to supply power, including generation, network, and retail costs. It essentially sets the maximum price energy retailers can charge customers.
Under the latest recommendations, the benchmark price is expected to lift between 2.5 per cent and 8.9 per cent from 2025-26, depending on your state or territory.
- The increases mean NSW bills could rise anywhere between $150 to $200 a year, depending on your provider.
- Similarly, with increases of over 5 per cent in south-east Queensland and in South Australia, residents may need to shell out up to $120 more annually.
- In Victoria, recommendations from the Essential Services Commission could see some bills could drop by $19, while others will see an increase of up to $68, depending on what zone a household falls into.
Claire Savage, chair of the Australian Energy Regulator (AER), said the agency is conscious of how its latest decision could impact households.
“We know that cost-of-living pressures are front of mind for many households and small businesses,” Savage said in a statement on Thursday.
“We’ve seen cost pressures across nearly every component of the DMO, and we have given careful scrutiny to every element of the DMO cost stack to ensure prices are a reasonable reflection of the costs of a retailer to supply electricity.”
But why did regulators recommend an increase?
In case you’re wondering why price increases were even put forward, much of this seems to be boil down to Australia’s energy mix, a.k.a. the combination of different energy sources — like coal, gas, and renewables — used to generate electricity.
Energy Minister Chris Bowen said on Thursday that old coal power stations are getting more expensive to run and often break down. As reported by the Sydney Morning Herald, he elaborated that when these plants suddenly stop working, it leaves a gap in supply, forcing expensive gas plants to step in, which causes big swings in electricity prices.
AER’s Savage also said accelerating investment in renewables, storage, transmission and gas plants would likely be best way to restrain energy prices, per the publication.
Echoing Bowen’s comments around unplanned outages at coal-fired power stations, she said: “[Coal plants] are ageing, they are not being maintained, and they are falling over unexpectedly.”
Are energy rebates still an option?
With our electricity bills only going up, everyone’s bound to be wondering what happens now with the energy rebates we’ve been receiving over the last year.
You’ll recall the government announced a $3.5 billion investment in the budget last year towards rebates for households and eligible businesses to ease cost-of-living pressures. With this, you would’ve seen a $300 cut — typically in quarterly instalments — in your energy bills in the last financial year.
The last round of these $75-a-quarter payments are expected to come through next month. So, with a federal election looming and cost-of-living coming front and centre for most voters, are parties planning to keep the rebates on the cards?
Energy Minister Bowen said he hasn’t ruled out further support for households, hinting there could be more information around this in the upcoming budget on March 25.
“As the Prime Minister, the Treasurer and I have made clear, we will always consider what more can be done. There’s a budget coming soon, and we’ll continue that approach of considering what more we can do,” Bowen told reporters on Thursday.
Opposition Leader Peter Dutton has also not ruled out extending rebates, as reported by the Australian Financial Review.
At least 80 per cent of Australians want the rebate to be extended, according to a survey of more than 2,000 people in the country by comparison site Canstar Blue.
How you could reduce your energy bills
In terms of what you can do from here, there are the usual tips many homeowners would’ve probably heard by now — such as improving insulation in the home, replacing old inefficient electric appliances, and exploring the option of installing (admittedly expensive) solar panels.
But even as a renter, it’s recommended to make the most of cheap power prices off-peak hours, or in some cases, in the middle of the day when solar output is abundant.
Many Australians may not even be across all the rebates or concessions they’re eligible for, with St Vincent de Paul’s national energy director Gavin Dufty telling the ABC less than half of vulnerable people are currently doing so. (To learn more about what rebates are available, you can check it out here.)
Eighty per cent of consumers could be saving money on their energy bills if they looked around for a better deal, according to the Australian Competition and Consumer Commission. So if you want to do some digging for plans in your state, you can check out the AER’s comparison tool here. Victorians can also compare prices here.
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