Expect power bill shock as prices will rise by $100 within weeks

Australian households are expected to be slugged with a massive spike in their power bills this July 1 after the Australian Energy Regulators (AER) announced an 18 per cent increase in standing offer electricity bills.

According to the AER wholesale power prices have already doubled in most states, with NSW electricity prices raising to $89 per megawatt-hour and VIC with $64 per megawatt-hour, while QLD residents have faced a whopping quadruple hit of $171 per megawatt-hour.

Here in the UK, soaring energy bills were the biggest driver of price growth in April. Much like in Australia, prices have risen after the cost of coal and oil went up around the world. Pressure also piled on the government to step up help for households. @9NewsAUS #AusVotes22

— Airlie Walsh (@AirlieWalsh) May 18, 2022

The “default market offers”, which is the price cap on what energy retailers can charge their customers on, is expected to rise in all states over the next two years.

Starting from July 1, default offers will jump by 14 per cent, or $227, in New South Wales; 11 per cent, or $165, in Queensland; and 7 per cent, or $124, in South Australia.

While default offers don’t directly determine energy costs for most Australian homes, they are set as the benchmark standing offer and are highly influential as big named retailers increase their offers.

“In setting these new default market offer prices, we understand the significant impact they will have on some consumers who may already be struggling with cost-of-living pressures,” Australian Energy Regulator chair Clare Savage said.

“We have given scrutiny to all factors affecting the default market offer calculation and have set safety-net prices that reflect the current conditions and underlying costs to retailers.”

However, Energy Consumers Australia argues that energy retailers should be more empathetic towards their customers.

“Retailers are not powerless to help consumers in this moment,’’ Energy Consumers Australia chief executive officer Lynne Gallagher said.

“Most consumers are supplied by the largest three retailers, and we believe there is some room in their margins whereby they can, and should, absorb some of the pain of rising wholesale costs.”

How is the EU handling the spike in energy prices caused by Russia? Transitioning to renewables faster. Why? Because they don’t have to pay anyone else for wind and sunlight. A lesson for Australia in bringing down power bills maybe?

— Pat Norman (@pat_norman) May 17, 2022

Though the AER does have energy-saving tips, they have explained that their job was not to make the cheapest price possible for consumers, but rather, to create the lowest payable rate for customers while making it possible for retailers to remain economically viable.

“If a large number of retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers,” Savage explains.

The soaring energy prices have now given the Albanese government a fresh economic headache as the rising cost of living and healthcare loom over them.