The Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) confirm prices may soar for hundreds of thousands of households and small businesses on Standing Offers when electricity prices increase from July 1.
Australians on a retailer Standing Offer in SA, South East QLD or NSW or an equivalent Standing Offer in Victoria can expect to pay up to $439 or 23.9 per cent more a year.
Victorian households on a Standing Offer based on a flat rate tariff and 4,000kWh usage per annum could pay an average of $352 (25 per cent) more annually. Small businesses might fork out an additional $752 (25 per cent).
Compare the Market’s Head of Energy, Meredith O’Brien, said while these price hikes had been predicted, they could still hurt those who have already been hit hard by the cost-of-living crisis.
“While households and small businesses on a Standing Offer have been bracing for these price increases for some time, we finally know just how much more we can expect to pay for electricity from July 1,” Ms O’Brien said.
“This will potentially hurt those customers that continue to remain on a Standing Offer, and we urge them to create good budgeting habits by comparing and potentially avoiding these increased costs by taking up a Market Offer if this suits their circumstances.”
Ms O’Brien said despite the price hike, the DMO and VDO are intended to be a fair price for homes and businesses on Standing Offer contracts.
“The default offer acts as a benchmark for all Market Offers to be compared against, as it is the most a customer should be paying for electricity per year, based on the average estimated usage for their area,” she said.
“It’s important to know that retailers are legally obligated to display the percentage difference between their market electricity plan on offer and the default offer.
“Put simply, it’s costing more than ever to generate and transmit electricity to our homes and businesses. Inflation also means it’s costing more for the materials used to maintain the infrastructure, while other costs are involved, including network poles and wires costs, environmental costs and retailer and residual costs.”
Ms O’Brien said while Standing Offers might have been some of the most cost-effective electricity plans available, the stabilisation of wholesale costs has resulted in better offered rates, discounts and sign-up credits for new electricity customers.
The DMO was initially implemented in NSW, South East QLD, and SA in 2019 as a cap on the price charged for energy on Standing Offer contracts, and was introduced in the ACT last year.
The VDO was introduced in 2019 and has replaced all Standing Offers following the Independent and Bipartisan Review of the energy market in Victoria.
On the DMO is 539,948 households and 91,040 small businesses, while a further 400,000 households and 55,000 small businesses are on the VDO.
“We know that the Government revealed a number of measures that’ll help families manage soaring electricity costs in the Federal Budget, but you could be saving right now by switching,” Ms O’Brien said.
“These Federal Budget benefits may help alleviate short-term financial stress, but customers shouldn’t be complacent and should continue to shop around.
“It takes a few moments to compare and as little as two business days to switch to a new electricity retailer to take advantage of a better plan.
“Don’t suffer in silence; start a conversation with your retailer, who will be able to help you.
“They may be able to offer bill smoothing, financial education, hardship plans or payment extensions.
“Retailers are required to provide assistance if you ask for it, but they can only do that if you let them know you’re under financial pressure.
“The reality is that it’s going to take a while for us to see these interventions reflected on our electricity bills.”
