Australians react to rising electricity bills — here's everything you need to know
- Replies 1
The news of the decision of the Australian Energy Regulator (AER) to raise electricity prices was a real shock to many families and businesses who are already struggling to make ends meet.
The increases are substantial and will add even more pressure to those who are already doing it tough.
With electricity bills set to rise by an average of $250 a year from July and putting the average residential electricity bill at $1,434, the AER's decision will no doubt be met with criticism from households and businesses alike.
The surge in energy prices has become a hot topic in Australia with many Aussies voicing their concerns about their struggles paying for their electric bills. Credit: BBC/Getty Images.
It should also be noted that the tariffs, known as default market offers, will rise between 8.5 per cent and 18.3 per cent in New South Wales, up to 12.6 per cent in south-east Queensland and 9.5 per cent in South Australia.
Additionally, Victoria's Essential Services Commission announced on Tuesday that they will follow suit.
AER chairperson Clare Savage said that while the group has justified the price rises by citing the need to cover the cost of upgrading the electricity network, the process to make the decision was "particularly difficult" due to the fact that many people will find it hard to accept that they have to pay more for something that is already essential to their daily lives.
She also emphasised that the benchmark price was not supposed to be the lowest available, urging Australians to seek alternatives and shop around for a better deal.
Ms Savage explained: "In setting these new DMO [default market offer] prices, we understand the significant impact they will have on some consumers who may already be struggling with cost-of-living pressures."
"If a large number of retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers."
Energy prices are increasing due to various external factors. Credit: ABC Gippsland/Kellie Lazzaro.
Meanwhile, incumbent energy minister Angus Taylor's decision to delay the reports' release was accused of being the culprit behind the higher DMO.
Incoming energy minister Chris Bowen said that "denial and delay" have caused the incoming government to be burdened by the costs.
"Nine years of Liberal denial and delay have a cost, and that cost is being paid by the Australian people, by Australian households in higher energy prices," he said.
"They got through the entire election campaign without telling the truth. They sat on this report, they approved its delay until after the election."
Mr Bowen emphasised the commitment of the new Labor government to its energy policy, pointing out its promise to bring electricity prices down.
He quipped: "What we are going to do is to implement policies we took during the election, which we'll see how prices come down as a result of our investments in the grid and the increase in renewable energy."
"I also note and welcome very much the [Annastacia] Palaszczuk government's announcement of $175 rebate for [Queensland] power customers."
Just weeks after the National Electricity Market said that wholesale prices have increased by 140 per cent in the 12 months to March 31, prices for coal and gas have also gone up, with reports citing that the war in Ukraine and global instability contributed to the price hikes of these energy sources.
While the AER and Victoria's Essential Services Commission have set benchmark electricity prices in order to protect consumers, these prices have been relatively stable in recent times due to the influx of renewable energy and lower demand for coal and gas.
Additionally, power retailers have pushed for tariff increases this year due to soaring costs of coal and gas, emphasising that the move would fast-track the exit of coal-fired plants, unexpected generator outages and international unrest.
The fact that prices are rising at a time when wages are stagnating will only add to the financial stress that many people are feeling. It's yet another example of how the cost of living is increasing faster than income, and it's something that the government needs to address urgently.
It is not surprising that the hikes prompted civil unrest among Australians, questioning the decision of the authorities.
The Australian Energy Council, which represents electricity and gas providers, claimed that the proportion of households on the default price is relatively small — about 10 per cent of users were said to be affected by the changes.
The lobby also pointed out that wholesale costs typically accounted for about a third of a residential electricity bill of $1,434, with poles and wires making up a bigger share.
One Sydneysider shared her struggles with the rising electric bills, saying that she needed to cut back on expenses after the "shocking" energy costs.
Lydia Rorimpandey shared her struggles with the rising electric bills, saying that she needed to cut back on expenses after the "shocking" energy costs. Credit: ABC News/Daniel Irvine.
Sydney resident Lydia Rorimpandey said: "We probably need to cut down on eating out or some holidays and those kinds of things."
"Wages obviously are not increasing as fast as the bills and food prices, fuel and everything else … so we have to be smarter these days."
Lydia said that she considered installing solar panels at her home in a bid to lower her energy consumption and rely her electricity needs on the grid.
The Australian Energy Regulator's (AER) decision to set a default price for electricity retailers will have far-reaching implications, according to Tony Wood from the Grattan Institute.
Mr Wood said the default price might initially be only applied to a small percentage of the market, but it could become the key reference used by all the retailers to set their other offers.
He also pointed out that while prices are certainly going up, some providers — smaller retailers usually — were more exposed to the price hikes compared to others.
For example, he said bigger retailers such as ASX-listed companies AGL and Origin were better able to manage the risks of the wholesale market through long-term and stable supply contracts.
He noted that those smaller retailers are often badly squeezed in the surging market due to their position in the spot market and short-term supply contacts.
Mr Wood explained: "A Queensland-based retailer with about 20,000 customers basically told their customers to go away."
"They said, 'We can't supply you with a product we think you're going to be able to afford, therefore we suggest you go and find another retailer'."
"So, it's all a bit messy."
The Australian Energy Regulator (AER) will have to tread a delicate line when it comes to setting electricity prices, according to Mr Wood.
On the one hand, the AER needs to ensure a competitive electricity market. On the other hand, it needs to make sure that any price increases are fair and reasonable.
Wood's comments come after a number of electricity providers have called for a 20% increase in the benchmark price.
While such an increase would be "provocative", he said that the AER would need to strike a balance between the competing interests of providers and consumers.
Lynne Gallagher, chief executive of the Energy Consumers Council, has spoken out about the issue, saying that the price rises are coming at the "worst possible time"
Ms Gallagher highlighted that customers should "not feel helpless" about the rising energy bills as there are ways to minimise the effects on their budgets.
Some suggestions include:
Additionally, the ECC also urged retailers to "reach out and offer them [customers] a better deal".
Ms Gallagher explained: "Winter is almost upon us and, with it, the need for many Australian households and small businesses to increase their energy use at certain times to keep themselves warm, comfortable and healthy."
"There are things they can do to reduce their bill and there are resources available to guide them through it."
Meanwhile, AEC chief Sarah McNamara said that while "an increase to the DMO is news that most of us could have done without", she emphasised that the issue has highlighted the importance of seeking better deals from your energy provider.
She informed customers that the default price being offered to them by their retailers was "not the cheapest deal out there", urging them to shop around as the standard offer only serves as a "cap on the amount customers should pay".
"No one likes to see prices rise, and with the current cost of living pressures, it's important that consumers shop around for the best deal," she quipped.
"Default offers are not the cheapest deal out there, they exist for customers who aren't shopping around for a better energy deal."
We encourage our members to follow the suggestions given by experts to reduce your electric bill.
We recommend seeking out your local government's rebate programs for energy. Check this article for more information on the rebate programs offered by your state.
We also want to give a shoutout to our partner Energy Scout, an online energy comparison website where you can compare and search for the best deals for your energy needs. Please visit this link* for more information.
What are your thoughts on this? Do you think the government's actions are enough or is it high time for the federal government to intervene and create energy policies that could benefit Australians in the long run?
The increases are substantial and will add even more pressure to those who are already doing it tough.
With electricity bills set to rise by an average of $250 a year from July and putting the average residential electricity bill at $1,434, the AER's decision will no doubt be met with criticism from households and businesses alike.
The surge in energy prices has become a hot topic in Australia with many Aussies voicing their concerns about their struggles paying for their electric bills. Credit: BBC/Getty Images.
It should also be noted that the tariffs, known as default market offers, will rise between 8.5 per cent and 18.3 per cent in New South Wales, up to 12.6 per cent in south-east Queensland and 9.5 per cent in South Australia.
Additionally, Victoria's Essential Services Commission announced on Tuesday that they will follow suit.
AER chairperson Clare Savage said that while the group has justified the price rises by citing the need to cover the cost of upgrading the electricity network, the process to make the decision was "particularly difficult" due to the fact that many people will find it hard to accept that they have to pay more for something that is already essential to their daily lives.
She also emphasised that the benchmark price was not supposed to be the lowest available, urging Australians to seek alternatives and shop around for a better deal.
Ms Savage explained: "In setting these new DMO [default market offer] prices, we understand the significant impact they will have on some consumers who may already be struggling with cost-of-living pressures."
"If a large number of retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers."
Energy prices are increasing due to various external factors. Credit: ABC Gippsland/Kellie Lazzaro.
Meanwhile, incumbent energy minister Angus Taylor's decision to delay the reports' release was accused of being the culprit behind the higher DMO.
Incoming energy minister Chris Bowen said that "denial and delay" have caused the incoming government to be burdened by the costs.
"Nine years of Liberal denial and delay have a cost, and that cost is being paid by the Australian people, by Australian households in higher energy prices," he said.
"They got through the entire election campaign without telling the truth. They sat on this report, they approved its delay until after the election."
Mr Bowen emphasised the commitment of the new Labor government to its energy policy, pointing out its promise to bring electricity prices down.
He quipped: "What we are going to do is to implement policies we took during the election, which we'll see how prices come down as a result of our investments in the grid and the increase in renewable energy."
"I also note and welcome very much the [Annastacia] Palaszczuk government's announcement of $175 rebate for [Queensland] power customers."
Just weeks after the National Electricity Market said that wholesale prices have increased by 140 per cent in the 12 months to March 31, prices for coal and gas have also gone up, with reports citing that the war in Ukraine and global instability contributed to the price hikes of these energy sources.
While the AER and Victoria's Essential Services Commission have set benchmark electricity prices in order to protect consumers, these prices have been relatively stable in recent times due to the influx of renewable energy and lower demand for coal and gas.
Additionally, power retailers have pushed for tariff increases this year due to soaring costs of coal and gas, emphasising that the move would fast-track the exit of coal-fired plants, unexpected generator outages and international unrest.
The fact that prices are rising at a time when wages are stagnating will only add to the financial stress that many people are feeling. It's yet another example of how the cost of living is increasing faster than income, and it's something that the government needs to address urgently.
It is not surprising that the hikes prompted civil unrest among Australians, questioning the decision of the authorities.
The Australian Energy Council, which represents electricity and gas providers, claimed that the proportion of households on the default price is relatively small — about 10 per cent of users were said to be affected by the changes.
The lobby also pointed out that wholesale costs typically accounted for about a third of a residential electricity bill of $1,434, with poles and wires making up a bigger share.
One Sydneysider shared her struggles with the rising electric bills, saying that she needed to cut back on expenses after the "shocking" energy costs.
Lydia Rorimpandey shared her struggles with the rising electric bills, saying that she needed to cut back on expenses after the "shocking" energy costs. Credit: ABC News/Daniel Irvine.
Sydney resident Lydia Rorimpandey said: "We probably need to cut down on eating out or some holidays and those kinds of things."
"Wages obviously are not increasing as fast as the bills and food prices, fuel and everything else … so we have to be smarter these days."
Lydia said that she considered installing solar panels at her home in a bid to lower her energy consumption and rely her electricity needs on the grid.
The Australian Energy Regulator's (AER) decision to set a default price for electricity retailers will have far-reaching implications, according to Tony Wood from the Grattan Institute.
Mr Wood said the default price might initially be only applied to a small percentage of the market, but it could become the key reference used by all the retailers to set their other offers.
He also pointed out that while prices are certainly going up, some providers — smaller retailers usually — were more exposed to the price hikes compared to others.
For example, he said bigger retailers such as ASX-listed companies AGL and Origin were better able to manage the risks of the wholesale market through long-term and stable supply contracts.
He noted that those smaller retailers are often badly squeezed in the surging market due to their position in the spot market and short-term supply contacts.
Mr Wood explained: "A Queensland-based retailer with about 20,000 customers basically told their customers to go away."
"They said, 'We can't supply you with a product we think you're going to be able to afford, therefore we suggest you go and find another retailer'."
"So, it's all a bit messy."
The Australian Energy Regulator (AER) will have to tread a delicate line when it comes to setting electricity prices, according to Mr Wood.
On the one hand, the AER needs to ensure a competitive electricity market. On the other hand, it needs to make sure that any price increases are fair and reasonable.
Wood's comments come after a number of electricity providers have called for a 20% increase in the benchmark price.
While such an increase would be "provocative", he said that the AER would need to strike a balance between the competing interests of providers and consumers.
Lynne Gallagher, chief executive of the Energy Consumers Council, has spoken out about the issue, saying that the price rises are coming at the "worst possible time"
Ms Gallagher highlighted that customers should "not feel helpless" about the rising energy bills as there are ways to minimise the effects on their budgets.
Some suggestions include:
- Seeking a better deal with the retailer (You can check out one of our sponsors to do this here*)
- Asking for aid if your bill is causing you financial stress
- Using less and being more efficient with your energy use
- Switching providers if necessary
- Employing low-cost measures such as "door snakes, floor rugs and weatherproof tape" to add insulation
Additionally, the ECC also urged retailers to "reach out and offer them [customers] a better deal".
Ms Gallagher explained: "Winter is almost upon us and, with it, the need for many Australian households and small businesses to increase their energy use at certain times to keep themselves warm, comfortable and healthy."
"There are things they can do to reduce their bill and there are resources available to guide them through it."
Meanwhile, AEC chief Sarah McNamara said that while "an increase to the DMO is news that most of us could have done without", she emphasised that the issue has highlighted the importance of seeking better deals from your energy provider.
She informed customers that the default price being offered to them by their retailers was "not the cheapest deal out there", urging them to shop around as the standard offer only serves as a "cap on the amount customers should pay".
"No one likes to see prices rise, and with the current cost of living pressures, it's important that consumers shop around for the best deal," she quipped.
"Default offers are not the cheapest deal out there, they exist for customers who aren't shopping around for a better energy deal."
We encourage our members to follow the suggestions given by experts to reduce your electric bill.
We recommend seeking out your local government's rebate programs for energy. Check this article for more information on the rebate programs offered by your state.
We also want to give a shoutout to our partner Energy Scout, an online energy comparison website where you can compare and search for the best deals for your energy needs. Please visit this link* for more information.
What are your thoughts on this? Do you think the government's actions are enough or is it high time for the federal government to intervene and create energy policies that could benefit Australians in the long run?
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