The Australian Energy Regulator (AER) has warned that electricity prices are set to rise by at least 20% in some states. This news comes as a blow to households and businesses already struggling with the economic impacts.
The AER has attributed the price rise to several factors, including the closure of coal-fired power stations, rising gas prices, and increased network costs. The regulator has also noted that the closure of coal-fired power stations leads to a greater reliance on renewable energy, which is currently more expensive.
The impact of rising electricity prices will be felt most acutely in New South Wales, where prices are expected to rise by 20%, and South Australia, where prices are expected to rise by 22%. Prices are also set to rise in Victoria and Queensland, although the increases in these states are expected to be less severe.
Energy Matters has been a leader in the renewable energy industry since 2005 and has helped over 40,000 Australian households in their journey to energy independence.
Let us discuss and choose the best quote that suits your needs and budget, and we can connect you with our trusted local solar installers in Melbourne, who will provide up to 3 FREE quotes for your home and business solar energy system. Get your free quotes today!
Price increases for households
New South Wales: Up 21.4% to 23.7%
South East Queensland: Up 19.5% to 19.8%
South Australia: Up 21.3% to 21.8%
Consumer groups have been concerned about the news and argue that rising electricity prices will disproportionately affect low-income households. These households are already struggling to make ends meet, and increasing electricity prices will only add to their financial burden.
Steps in reducing energy consumption
The AER has suggested that households and businesses can mitigate the impact of rising electricity prices by taking steps to reduce their energy consumption. This includes investing in energy-efficient appliances, using renewable energy sources where possible, and reducing energy usage during peak demand.
The Climate Council is campaigning for interest-free loans to assist Australians in upgrading their houses’ energy efficiency and replacing inefficient gas appliances with effective all-electric ones, such as heat pumps and solar hot water.
Purchasing an electric vehicle (EV), instead of a traditional vehicle, can benefit by reducing energy costs. Check out our page to learn more about the guide to calculating the energy consumption of an electric vehicle.
Energy Transformation Campaigner at the Climate Council, Nathan Hart said, “There are about eight million homes in Australia that were built prior to minimum energy efficiency standards.
“With a little help, every one of these could be upgraded to deliver cheaper power bills. Smart governments like the ACT and Tasmania offer interest-free loans so families can upgrade and start saving immediately.”
AER encourages consumers to shop around for the best deal
AER Chair Ms Clare Savage said, “We know many households and businesses are already struggling with cost-of-living pressures. This is certainly a challenging environment for people to hear that further electricity price rises are on the horizon.
According to Savage, the regulator must strike a balance between the need to safeguard customers from excessively high prices and the need to make sure shops can cover their costs and offer competition.
“We encourage consumers to shop around for the best electricity deal for your circumstances.”
AER’s Default Market Offer 2023–24 draft determination overview
The Australian Energy Regulator (AER) has released its draft determination for the Default Market Offer (DMO) for the 2023-24 financial year. The DMO is a price cap on electricity prices that applies to customers on standing offers, who are often the most vulnerable and least engaged electricity customers.
The draft determination proposes a 3.7% increase in the DMO price cap for customers on standing offers in New South Wales, South Australia, and South East Queensland. This increase reflects changes in the underlying costs of providing electricity, including increases in network costs and wholesale electricity prices.
The AER notes that while the increase in the DMO price cap may result in higher electricity bills for some customers, it also reflects the true cost of providing electricity.
The regulator also notes that the DMO price cap is designed to prevent retailers from charging excessively high prices to customers on standing offers.
The AER’s draft determination also includes a number of changes to how the DMO is calculated. These changes are designed to improve the accuracy of the DMO price cap and ensure that it reflects the actual cost of providing electricity.
The AER has also proposed changes to how the DMO price cap is adjusted for inflation. Under the proposed changes, the DMO price cap will be adjusted annually based on the Consumer Price Index (CPI).
“We know many households and businesses are already struggling with cost-of-living pressures. This is certainly a challenging environment for people to hear that further electricity price rises are on the horizon,” AER Chair Clare Savage said.
“Energy prices are not immune from the significant challenges in the global economy right now; that’s why it’s more important than ever that we strike a balance in setting the DMO to protect consumers as well as allowing retailers to continue to recover their costs and innovate.
“It’s important to understand that the DMO is not the best offer; it is a safety net.
Electricity prices to remain an issue for years to come
Despite these measures, many are concerned that rising electricity prices will continue to strain households and businesses significantly. The AER has warned that prices will continue rising in the coming years as the country transitions to a more renewable energy-focused economy.
The news that electricity prices are set to rise by at least 20% in some states is a cause for concern for households and businesses across Australia. As Australia transitions to a more renewable energy-focused economy, rising electricity prices will likely remain a significant issue for years to come.
Source&Images: Australian government-AER, Climate Council, 7news
Switching to a better plan?
You may already have an energy plan but want to shop for a better deal. If you want to save money on your electricity and gas bills, Energy Matters can help using our “Energy Health Check”!
Energy Matters’ “Energy Health Check” is a cutting-edge energy comparator tool that allows you to compare your area’s most competitive retail offers. We collect the data from our wide range of trusted retailers, allowing you to decide about changing your plan.
If your goal is to minimise the cost of your gas and electricity bills, switch to a better plan now!