More breathing room for Aussies as changes to energy prices are underway. Here's what we know so far
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If you recently opened your electricity bill and felt ill due to the prices, you're not alone.
Rising power prices have become a genuine concern for many Australians, especially seniors.
However, there's news on the horizon that could make a difference to everyone's pockets.
The federal government has been planning a major shake-up on how energy price caps work, and it could mean more savings and less confusion for Aussies.
Energy Minister Chris Bowen recently announced a series of reforms aimed at protecting households from soaring power prices.
During his engagement at Australian Energy Week in Melbourne, Minister Bowen explained several factors affecting energy prices across the country.
'Currently, the independent Australian Energy Regulator (AER) sets the default market offer (DMO) as a benchmark for residential and small business electricity bills in NSW, South East Queensland and South Australia, while here the Victorian default offer is set by the Essential Services Commission,' Minister Bowen prefaced.
'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging while leaving the job of putting downward pressure on prices to competition.'
'However, I'll be frank. I don't think it's working that way, and reform is needed,'
According to Bowen, about 80 per cent of billpayers could get a better deal if the system was simpler.
'It's difficult to defend the DMO when the customer is required to do the deal hunting,' Minister Bowen said.
'We know it could be so much simpler.'
What will the new system look like?
The government revealed its plans to introduce a 'reformed pricing mechanism' by 2026.
These reforms could make it easier for consumers to get the best deals without the need to become energy market experts.
The new system could set an actual maximum price for standing offers in DMO regions,
It could bring customers more in line with Victoria's approach, which has seen smaller bill increases in recent years.
In 2024–25, the Victorian Default Offer rose by less than one per cent, while DMO regions had varied prices.
Customers based in NSW saw a slight decrease in their energy bills, but South East Queenslanders faced increases of around four per cent.
The new reforms aim to bring a more consistent, consumer-friendly cap that would keep bills fairer across the country.
What does this mean for you?
If you're one of the many Australians sticking with your energy provider's default offer, these changes could mean fewer chances of being overcharged.
The new cap should act as a ceiling on what Aussies can be charged for a basic plan, ensuring that everyone gets a fair deal.
However, these changes go beyond the price cap.
The government and industry could then start looking at ways to reduce the underlying costs that make up energy bills, such as wholesale electricity prices and network costs that account for 40 per cent of the average bill.
What are the concerns?
While the reforms sound promising, not everyone is cheering for the changes.
Several energy providers warned that tighter caps could squeeze their already thin profit margins, especially for smaller companies.
They also presented the risk that if smaller retailers have a hard time operating, competition could suffer.
Less competition could mean fewer choices for customers and less innovation in the long run.
AGL, one of Australia's biggest energy providers, responded to Minister Bowen's proposal.
While the energy company is open to working with the government, it's essential to also 'look at the whole picture'.
'A focus on improving network productivity is essential to keep these costs in check,' AGL stated.
'We need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate.'
How can you make sure you're not paying too much right now?
While we wait for these reforms to kick in, there are still things you can do to keep your energy bills in check:
Have you struggled to find a good deal from your energy provider? Could these changes help Aussie households in the long run, or do you have any reservations about the reforms? Please share your thoughts and opinions about this issue with us in the comments below.
MORE NEWS: 'This is looking like a new normal': Why power prices aren't coming down anytime soon
Rising power prices have become a genuine concern for many Australians, especially seniors.
However, there's news on the horizon that could make a difference to everyone's pockets.
The federal government has been planning a major shake-up on how energy price caps work, and it could mean more savings and less confusion for Aussies.
Energy Minister Chris Bowen recently announced a series of reforms aimed at protecting households from soaring power prices.
During his engagement at Australian Energy Week in Melbourne, Minister Bowen explained several factors affecting energy prices across the country.
Aussies have seen varying increases in energy bills depending on their location. Image Credit: Pexels/SHVETS Production
'Currently, the independent Australian Energy Regulator (AER) sets the default market offer (DMO) as a benchmark for residential and small business electricity bills in NSW, South East Queensland and South Australia, while here the Victorian default offer is set by the Essential Services Commission,' Minister Bowen prefaced.
'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging while leaving the job of putting downward pressure on prices to competition.'
'However, I'll be frank. I don't think it's working that way, and reform is needed,'
According to Bowen, about 80 per cent of billpayers could get a better deal if the system was simpler.
'It's difficult to defend the DMO when the customer is required to do the deal hunting,' Minister Bowen said.
'We know it could be so much simpler.'
What will the new system look like?
The government revealed its plans to introduce a 'reformed pricing mechanism' by 2026.
These reforms could make it easier for consumers to get the best deals without the need to become energy market experts.
The new system could set an actual maximum price for standing offers in DMO regions,
It could bring customers more in line with Victoria's approach, which has seen smaller bill increases in recent years.
In 2024–25, the Victorian Default Offer rose by less than one per cent, while DMO regions had varied prices.
Customers based in NSW saw a slight decrease in their energy bills, but South East Queenslanders faced increases of around four per cent.
The new reforms aim to bring a more consistent, consumer-friendly cap that would keep bills fairer across the country.
What does this mean for you?
If you're one of the many Australians sticking with your energy provider's default offer, these changes could mean fewer chances of being overcharged.
The new cap should act as a ceiling on what Aussies can be charged for a basic plan, ensuring that everyone gets a fair deal.
However, these changes go beyond the price cap.
The government and industry could then start looking at ways to reduce the underlying costs that make up energy bills, such as wholesale electricity prices and network costs that account for 40 per cent of the average bill.
What are the concerns?
While the reforms sound promising, not everyone is cheering for the changes.
Several energy providers warned that tighter caps could squeeze their already thin profit margins, especially for smaller companies.
They also presented the risk that if smaller retailers have a hard time operating, competition could suffer.
Less competition could mean fewer choices for customers and less innovation in the long run.
AGL, one of Australia's biggest energy providers, responded to Minister Bowen's proposal.
While the energy company is open to working with the government, it's essential to also 'look at the whole picture'.
'A focus on improving network productivity is essential to keep these costs in check,' AGL stated.
'We need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate.'
How can you make sure you're not paying too much right now?
While we wait for these reforms to kick in, there are still things you can do to keep your energy bills in check:
- Compare plans regularly: Even if it's a hassle, shopping around can save you hundreds each year. Websites like Energy Made Easy and Victorian Energy Compare make it easier.
- Ask your provider for a better deal: Sometimes, just calling and asking if you're on their best plan can lead to instant savings.
- Check for concessions: If you have a Seniors Card, Pensioner Concession Card, or other eligible card, you may be entitled to discounts on your energy bills.
- Be energy smart: Simple changes like switching to LED bulbs, using appliances efficiently, and turning things off at the wall can add up over time.
MORE NEWS: 'This is looking like a new normal': Why power prices aren't coming down anytime soon
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