Latest news with #VictorianDefaultOffer
Herald Sun
18-06-2025
- Business
- Herald Sun
Discount power bills: DMO crackdown by Labor will crush small energy retailers
The Albanese government's planned overhaul of household electricity price caps could put small energy retailers surviving on razor-thin profit margins out of business. The electricity industry was reeling at the policy proposal on Wednesday as intermittent coal outages in Victoria this winter stoke wholesale prices, a force that will inevitably be passed through to energy customers. Federal Energy Minister Chris Bowen confirmed the government would review the Default Market Offer (DMO) – the benchmark power price in NSW, Queensland and South Australia – with a view to stripping out allowances that protect retailer margins. The idea is to bring the national standard into closer alignment with Victoria's more tightly regulated counterpart, the Victorian Default Offer (VDO), which will rise by less than 1 per cent in 2024–25. While the move is politically popular amid persistent cost-of-living pressures, it represents a gamble by the re-elected Labor government that could backfire by reducing utility competition as small retailers capitulate under further pressure. 'This is classic Trump-style politics – a distraction tactic,' one senior industry executive said speaking on the condition of anonymity. 'Labor is blaming retailers when even the ACCC acknowledges margins are at historic lows. All this will do is squeeze out smaller operators and reduce competition, with no discernible impact on prices.' The government's intent to unwind some components of the DMO – including retailer cost allowances – has reignited discussion over the true drivers of rising energy bills. Retailers argue the biggest pressure point is not retail margins, but network charges, which account for about 40 per cent of the DMO and are rising as transmission infrastructure is upgraded to support the transition to renewables. Network costs are approved by the government and are the fastest growing component of the DMO. Australian Energy Council chief executive Louisa Kinnear, which represents the country's retailers, said while a review of the DMO was welcome, it must be comprehensive in its scope as far as cost components go. 'Retail competition allowances have already been stripped out of the DMO in the name of affordability. Yet bills are still climbing, and it's not because of retail margins,' Ms Kinnear said. 'Retailers are also required to support customers facing hardship, which often means carrying bad debts. If we want prices that reflect actual costs, all elements of the DMO need to be under scrutiny.' AGL echoed that sentiment, insisting the review should not lose sight of the role of network costs. 'To reduce energy bills, we need to look at the whole picture. The government and industry are actively working on measures to reduce wholesale electricity costs. At 40 per cent of an average bill, network costs are a big component of bills and are continuing to grow quickly. 'A focus on improving network productivity is essential to keep these costs in check. Retail costs only represent around 10 per cent of an average bill and we need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate,' a spokesman for AGL said. Victoria, meanwhile, is facing a renewed test of its grid reliability as colder temperatures return and EnergyAustralia's Yallourn coal power station operates at just 25 per cent of its capacity. Yallourn, the state's second largest coal-powered generator, has been crippled by equipment failures, including a collapsed air duct, though the company has not disclosed the cause of outages at two of its four generating units. The outages and cold weather again leave Victoria with little wriggle room. The country's energy market operators expect sufficient capacity to minimise concerns about blackouts, but prices are forecast to surge. Households and businesses, however, do not pay wholesale electricity prices. The disruption is material for EnergyAustralia, which typically uses Yallourn to supply its retail customers and hedge against volatility in wholesale markets. With the coal plant hobbled, the utility is instead relying on more expensive gas peaking plants to meet demand – a margin-eroding outcome that it can only partially mitigate due to benign conditions in the gas market. Gas prices remain elevated but manageable, buoyed by near-record storage levels. However, continued outages at Yallourn could test those assumptions if winter demand intensifies. Originally published as Chris Bowen's default market offer crackdown will crush small energy retailers
Sky News AU
26-05-2025
- Business
- Sky News AU
Aussie households facing upwards of $280 extra to keep lights on during 2026 financial year as regulator sets new rates
Australians will have to pay as much as $280 extra to keep the lights on from July, the national energy regulator's latest default market offer for the 2026 financial year has revealed. The Australian Energy Regulator on Monday handed down the FY26 Default Market Offer – the maximum price a retailer can charge customers in NSW, south-east Queensland and South Australia. It applies to households and small business in those areas, while Victoria's energy regulator, the Essential Services Commission (ESC), sets the Victorian Default Offer. NSW households are copping some of the highest power price increases, with costs increasing by up to 9.7 per cent or $280 for the year. Small businesses in the state will incur an increase of up to $489 per year, equating to a 8.5 per cent increase for the coming financial year. The Australian Energy Regulator's chair Clare Savage acknowledged it was a 'difficult decision' as many Australians continue to struggle with crippling price pressures. 'We know this is not welcome news for consumers in the current cost-of-living environment,' Ms Savage said in a statement. Households in NSW are facing power price rises between 8.3 and 9.7 per cent, while those in south-east Queensland are facing jumps upwards of 3.7 per cent and South Australian households are looking at increases between 2.3 and 3.2 per cent. Victorian prices are expected to rise about one per cent on average, however, those with CitiPower are facing a 6.2 per cent surge in the coming financial year. Ms Savage said the price rises come amid 'sustained pressure' across all components of the power network and urged Aussies to shop around. 'I strongly encourage all consumers to avoid staying on an old or uncompetitive plan,' Ms Savage said. 'Contact your retailer to see if you can get a better offer or shop around. '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.' Deputy opposition leader Ted O'Brien said the increase in power prices are "not sustainable for families, businesses and industry". "The Australian Energy Regulator's final Default Market Offer released today confirms that Australian households are now paying up to $1,300 more for electricity than Labor promised them," Mr O'Brien said in a statement. While households are copping significant price increases, small businesses in NSW will face power price rises between 5.5 and 8.5 per cent. South Australian businesses could see their prices jump by upwards of 3.5 per cent while businesses in south-east Queensland could see their bill jump 0.8 per cent. The major price hikes for those in NSW comes as the costs of building transmission lines for renewable energy output will impact power bills, according to the Australian Energy Market Operator. Overhead transmission line project costs have ballooned up to 55 per cent , leading the operator to review uncommitted projects in a bid to keep costs down.
Yahoo
12-03-2025
- Business
- Yahoo
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. RELATED Three major dates looming that could save Aussies thousands: 'Crunch time' Superannuation warning as new $73,000 retirement reality exposed Final instalment of $300 energy cash boost to hit accounts from April 1: 'Winding down' 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 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 in to access your portfolio
