New electricity prices 'not welcome news' for Australians in some states
Electricity prices are set to rise for almost half a million households in NSW, south-east Queensland, and South Australia from 1 July. The Default Market Offer (DMO), a reference price for electricity set by the Australian Energy Regulator (AER), will increase for 475,727 residences and 91,060 small businesses in these states. The DMO is updated yearly and acts as a price cap that energy retailers can charge residential and small business customers on default contracts, also known as standing offer contracts. Victoria also released its DMO on Monday.
The costs of electricity will be higher than last year, as the wholesale costs and the price of transporting electricity have risen, according to AER. The AER said retail costs, such as the cost of billing customers, running call centres, acquiring new customers, managing defaults, and the rollout of smart meters, have added to the price hikes. In NSW, residential customers without controlled load will be hit with price hikes of 8.5 per cent to 9.1 per cent, while customers with controlled load will face increases of 8.3 per cent to 9.7 per cent. Residential customers without controlled load in south-east Queensland will face price increases of 3.7 per cent. Customers with controlled load will be hit with price increases of 0.5 per cent. In South Australia, households without controlled loads will be affected by price increases of 3.2 per cent while those with controlled loads will witness a 2.3 per cent hike in prices.
AER chair Clare Savage said the price hikes are "not welcome news". "We know this is not welcome news for consumers in the current cost-of-living environment," she said. "As noted in our draft determination, sustained pressures across almost all components of the DMO have driven these price rises, with wholesale and network costs rising in most jurisdictions between 1 per cent and 11 per cent, and retail costs between 8 per cent and 35 per cent compared with last year." Domestic customers in Victoria will pay about 1 per cent more than last year.
Small business customers on standing offer plans will experience increases of 0.8 per cent to 8.5 per cent, depending on the region. Those in NSW will face increases of 7.9 per cent to 8.5 per cent.
Small business customers based in south-east Queensland will witness increases of 0.8 per cent, and those in South Australia will be hit with a 3.5 per cent hike in prices.
And small businesses in Victoria will pay around 3 per cent more.
Savage said you can contact your retailer for a better offer below the DMO. "I strongly encourage all consumers to avoid staying on an old or uncompetitive plan. Contact your retailer to see if you can get a better offer or shop around," she said. "At least every 100 days, your retailer must tell you on the front page of your bill if they can offer you a better deal."
Sally Tindall, data insights director at financial comparison site Canstar Blue, said switching plans could save consumers hundreds of dollars. "These electricity price hikes will knock the wind out of the sails for many families, just when they thought they'd turned a corner in the cost-of-living crisis. "Our research shows switching from an average-priced plan to one of the lowest in the market could save you over $400 a year in some cases — this, for some households, could be enough to mitigate the upcoming price hikes. "If you can't pay your electricity bill, contact your provider straight away and ask what options might be available. Every electricity provider has a hardship program they must offer you to help you get back on track."
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