Today (15 March 2023) the Australian Energy Regulator and the Victorian Essential Services Commission simultaneously released their draft determinations for Default Offer pricing for the coming financial year.
The news is far from great:
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From 1 July 2023, Default Offer prices are slated to rise by up to 33% in Victoria, and by between 18% to 24% across the rest of the NEM.
No matter where you live in Australia, starting from 1 July 2023, you're in for some Bill Shock.
Bill Hero is here to help
The official advice from the energy regulators remains that you should shop around and seek out the best-priced plans:
Customers who shop around continue to save on their bills. Based on offers available in February 2023, residential customers switching from a standing offer to the lowest market offer could save 7% to 17% and small business customers could save 9% to 26%, depending on their region.
If you're already a subscriber, you'll know that Bill Hero does this work for you, scouring the market on every bill cycle and running a personalised comparison, to see if there's a better-priced plan out there for you.
If youâre not already a subscriber, then what are you waiting for?! Â Thereâs no better time to join.
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Sadly, the retail energy bill pain is far from over, with energy consumers facing steep price increases nationwide.
The latest Default Offer news from AER and from the Victorian ESC paints a bleak picture of expected energy bill price increases on the horizon.
What's a Default Offer?
Since 1 July 2019, new regulations have replaced the old Standing Offers with Default Offers across most of the National Energy Network.
There are two kinds of Default Offers:
The Default Market Offer (DMO) is set by the AER for Residential and SME single and single + controlled load tariffs in NSW, SA and South East QLD
In Victoria, the Essential Services Commission sets the Victorian Default Offer (VDO) for single-rate and controlled-load tariffs in Victoria only
Although calculated and defined in different ways, both DMO and VDO set a cap on the price that a customer will pay if they have not entered into a Market Offer with their retailer. They also set the benchmark against which any discounts offered in Market Offers must be expressed.
Here's more information about Default Offers from Savings as a Service:
The price increases put forward today by the AER in its draft DMO decision for 2023-24 look grim for energy consumers, with controlled-load households in the NSW Endeavour electricity distribution zone hit hardest with a 23.7% price increase.
State
Distribution Zone
Resi no CL
Resi with CL
SME no CL
NSW
Ausgrid
+22.2%
+21.5%
+14.7%
Endeavour
+20.9%
+23.7%
+19.9%
Essential
+22.1%
+21.4%
+17.5%
QLD
Energex
+19.8%
+19.5%
+19.4%
SA
SAPN
+21.8%
+21.3%
+25.4%
VIC Default Offer price increases
The draft VDO update also released today has even worse news for Victorian energy consumers:
The average annual bill for domestic customers on the Victorian Default Offer would be 31.1 per cent higher ... [and] ... the average annual bill for small business customers on the Victorian Default Offer would be 33.2 per cent higher.
Things could have been even worse ...
There's no denying that the price increases in these draft determinations are ugly, and will further impact households already under increasing cost-of-living pressures, but it's actually not as bad as it might have been...
Households face power bill shock, electricity price rise of 24 per cent from July 1 forecast by the Australian Energy Regulator https://t.co/5o3NDm64bZ via @thetiser - It's like the doctor saying good news, I only need to chop off your foot, not take your whole leg....
In October 2022, Federal Treasurer Jim Chalmers handed down a budget that included a forecast average +50% retail energy price increase, driven largely by abrupt increases to wholesale gas and coal prices.
In December, the federal government intervened, capping wholesale gas prices at $12 a gigajoule and coal prices at $125 a tonne, with the intent to drive down the costs for electricity generation, and reduce the expected retailer energy price increases.
The AER chair, Clare Savage, said the increases were âsignificantâ, but they could have been as much as 40% to 50% without the federal governmentâs intervention in December to cap domestic gas and coal prices.
Read it and weep
The full detail for both the AER's DMO and the Victorian VDO draft decisions for FY 2023-24 are available on their websites here :
There are two sides to the coin for energy savings: Bill Hero is about paying less for the energy you use. Energy Coach is about using less.
As prices steadily climb higher, getting on top of your energy consumption is more important than ever.
One of the best ways to achieve this is by generating your own electricity with a solar installation. If youâre unsure where to start, our partners at SolarQuotes have you covered.
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The ACTU Price Gouging Inquiry holds a blowtorch to the energy industry, highlighting the predatory pricing tactics used across the industry and how it is impacting the Cost of Living in Australia.
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Richard Foxworthy
