Aussies to get ‘rude shock' as price of most stressful bill goes up again: ‘Travesty'
Australians should prepare to see their electricity bills go up soon, even as many continue to struggle to keep up with already staggeringly high prices. The Australian Energy Regulator has released its draft decision Default Market Order (DMO), and the Essential Services Commission has dropped the draft decision for the Victorian Default Offer (VDO).
The DMO applies to residents in NSW, southeast Queensland, and South Australia, and it acts as a cap on what energy retailers should charge consumers for a standing offer electricity plan. Meanwhile, the VDO is considered a fair price for a standing offer electricity plan to help consumers know if they're getting a good deal or not.
However, these orders and offers also act as a reference price for all market offers in other regions.
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In Victoria, the average household is set to be slugged by an annual increase of $12 on their electricity bills.
The standing offer tariffs could be $19 lower for AusNet and Powercor areas, or $68 higher for CitiPower regions, based on annual usage of 4,000 kilowatt hours.
Small businesses are expected to cop an average annual hike of $103.
Bills are set to go up by $77 in the AusNet area, and be $128 higher in CitiPower region.
The VDO only applies to about 13 per cent of households and 20 per cent of businesses that haven't opted for a more competitive deal.For consumers in NSW, South Australia and south east Queensland, prices are only going up.
Households can expect to see a 2.5 per cent to 8.9 per cent jump in their prices compared to last financial year, which translates to roughly a $55 to $200 increase.
Small business customers could see rises between 4.2 per cent and 8.2 per cent, or a hike of $76 to $312 hike.
'We've seen cost pressures across nearly every component of the DMO, and we have given careful scrutiny to every element of the DMO cost stack to ensure prices are a reasonable reflection of the costs of a retailer to supply electricity,' Australian Energy Regulator (AER) chair Clare Savage said.
It's worth remembering that these are draft decisions and not yet set in stone.
Once a final decision is made, the price hikes will kick in on July 1.
The AER said wholesale market and network costs, which are the two largest components of DMO prices, have seen increases of 2-12 per cent for the majority of customers.
While the Essential Services Commission said network costs were the biggest contributor to the changes.
Yahoo Finance contributor David Koch said there has been a higher-than-normal demand for electricity triggered due to extreme weather conditions on the east coast.
'We haven't seen demand like this for nearly a decade and that volume has been compounded by reduced coal availability and transmission issues,' Koch said.
'Higher wholesale prices could mean bigger bills for households and when the government rebates finally start to roll off the difference could be a real rude shock.
'It's important to remember, while the DMO provides a safety net for consumers, there are often much more attractive deals on offer for consumers willing to compare and switch.'
Even though state and federal governments have offered energy rebates to help with this rising cost, it's still not enough.
According to Compare the Market, three-quarters of consumers said they had been shocked by their electricity bills in the last three months.
Energy beat out other costs like water, fuel, phone and internet, causing more panic than credit card and loan repayments.
One in five Aussies said their energy bill would be the one to take their bank account into overdraft or blow out their credit card.
Australian Council of Social Service (ACOSS) CEO Cassandra Goldie said people are going to extreme lengths just to keep up with this one bill.
'It's a complete travesty that in one of the world's wealthiest nations, people are getting sick, skipping meals and delaying medical appointments because they can't afford to cool and power their homes,' she said.Sign in to access your portfolio
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