Australian electricity prices set to surge by up to 25%

Residential and small business customers are looking for further government assistance in dealing with a forecast surge in national electricity prices.

Electricity users have had their worst fears confirmed with the Australian Energy Regulator (AER) forecasting a significant jump in pricing in the new financial year.

Releasing its final determination for the 2023–24 Default Market Offer (DMO), the AER forecast some residential users can look forward to price increases of between 20.8% and 23.9% from 1 July and from 19.6% to 24.9% depending on the region they live in.

Once again, depending on the region they operate from, small business customers are facing increases of 14.7% to 28.9%, depending on their region.

AER chair, Clare Savage, said current cost-of-living pressures had received strong consideration in the regulator’s determination.

“We know households and small businesses continue to face cost-of-living pressures on many fronts, and that’s why it’s important the DMO provides a safety net for those who might not have shopped around for a better power deal,” Ms Savage said.

“In setting the DMO price this year we have sought to protect consumers from unjustifiably high prices and at the same time allow retailers to offer consumers better deals than their standard plans.”

Victorians hit hard

Meanwhile, the Australian Energy Council (AEC) has suggested that Victorian electricity retailers will be coming up against greater market risks as a result of new Victorian regulated prices.

AEC chief executive, Sarah McNamara, has pointed the finger at Victoria’s energy regulator, the Essential Services Commission (ESC), stating it had changed its wholesale pricing methodology without proper consultation.

“While we understand the pressure to keep consumer prices as low as possible, it is also incumbent on the regulator to enable retailers, who are exposed to all market risks, to cover their costs. By changing the rules of play so abruptly, rather than in a phased and transparent way, the ESC has just made that a lot harder.

“The Victorian Default Offer (VDO) announced today will hamper the ability of retailers to offer competitive market deals enjoyed by the majority of their customers. Yet at the same time the ESC urges customers to shop around for market offers through the $250 Power Saving Bonus.

Price hike no surprise

In a recent review of the Australian market, the US-based International Energy Agency (IEA), noted that the Department of the Treasury had forecasts a 56% hike in electricity prices over financial year 2022-2023, with gas prices rising by 44%.

The IEA added that Australian Competition and Consumer Commission (ACCC) had confirmed that electricity bills have jumped by $300 on average since April 2022.

“The critical importance of lowering energy bills has also been emphasised by the new Australian Government’s election commitment to reduce consumer energy bills by AUD 275 per household by 2025. The IEA’s 2022 Energy Efficiency Market Report also confirms how living in a more efficient home and driving a more efficient car can save consumers up to 70% of their household energy bill,” the IEA report suggested.

There is some relief out there

The Australian state and territory governments recently announced they will provide up to $3 billion in electricity bill support for eligible households and small businesses through an Energy Bill Relief Fund.

Under the new funding arrangement, eligible households can receive rebates of up to $500 -depending on what region they live in.

In NSW, Queensland, South Australia and Tasmania, the total bill relief will be $500 per eligible household.

Victoria households can be paid $250, plus a one off $250 direct payment through Victoria’s 2023 Power Saving Bonus Payment.

Western Australia and Northern Territory eligible homeowners can receive total bill relief of $350.

In the ACT, the bill relief will be $175 per eligible household. However, households in the ACT also benefit from the Large-scale Feed-in Tariff Scheme which will lower the average bill by $152.

Small businesses benefits

Under the recent agreements, the Australian Government is providing $325 in bill relief to eligible small businesses in all jurisdictions.

Small business owners in NSW, Queensland, Western Australia, South Australia, Tasmania and the Northern Territory will receive co-contributions of $325, resulting in a total bill relief of $650 per customer.

WA support

Western Australian electricity provider Synergy has welcomed the Commonwealth and WA government support for a National and WA State Energy Bill Offset for eligible residential and small business customers.

Funded by both the Commonwealth and WA State Governments, the offset payments will see residential customers receiving a minimum of $400 (paid over two instalments), and small business customers receiving a $650 payment (paid over two instalments).

The first payment will added to eligible Synergy accounts on 8 July 2023, with a second payment provided on 2 December 2023.

World class energy network

On the positive side, Australia’s energy networks are highly regarded internationally.

According to World Data, Australia can be completely self-sufficient with domestically produced energy.

It suggested the most important figure in assessing Australia’s energy balance is the total consumption of 237.39 billion kWh of electric energy per year. Per capita this is an average of 9,241 kWh.

World Data says the total production of all of Australia’s electric energy producing facilities is 250 bn kWh, 105% of own requirements.

“The rest of the domestically produced energy is either exported into other countries or unused. Along with pure consumption, the production, imports and exports play an important role. Other energy sources, such as natural gas or crude oil are also used.”

New energy transition

The IEA has also praised Australia’s energy network and welcomed moves to increase renewable energy offerings.

In its regular in-depth peer reviews of the energy policies of its member countries, the IEA noted that recent Australian policy moves will support economic diversification and industrial growth while improving energy system resilience

The says Australia is taking positive steps to increase its climate and clean energy ambitions.

However, it also recommended that it continues to strengthen its policies and long-term plans to ensure it meets its targets.

According to the new IEA report, a successful clean energy transition would support the country’s economic diversification and industrial growth while providing long-term resilience against global energy market shocks.

“Australia is an important player in global energy markets that is helping to meet today’s needs while advancing the transition to clean energy,” said IEA Executive Director Fatih Birol.

“I welcome Australia’s efforts to drive progress on low-emissions hydrogen and supplies of critical minerals – and its leadership on working with partners, including through the IEA, to strengthen the diversity and resilience of clean energy supply chains. Our new report sets out the steps Australia can take to accelerate its own clean energy transition securely and affordably.”