On July 1st, Aussie households are set to be hit by a surge in the cost of their power bills, as the Australian Energy Regulator (AER) is raising the default market offer price caps. This means increasing the maximum cost retailers can charge households and businesses on default offers.
How much are prices going to increase by?
The prices are dependent on the state that you live in. Following are the caps that state and territory regulators have set out.
NSW: Dependant on distribution zones the default market offer will increase by 9.6%, 11% or 18.3%. This would equate to a maximum increase of between $210 to $369 annually.
Queensland: According to the AER, south-east Queensland power bills are expected to rise by 12.6% which equates to $220 annually. Everywhere else in Queensland, power bills will increase by 9.2%, which equals $119 annually, according to the Queensland Competition Authority report.
South Australia: The default market offer in South Australia is expected to rise by 9.5%, equating to $198 a year.
Victoria: According to the Essential Services Commission the annual bill for typical residential customers will be 5% higher, equating to a $61 increase.
Western Australia: Each year the Western Australian Government determines household prices when delivering their state budget. When they announced their margins in May, the Government announced prices would increase by 2.5%.
Northern Territory: The prices in the Northern Territory are set out by the Electricity Pricing Order which is set by the Territory’s Treasurer. The order that will come into effect on July 1st hasn’t been made publicly available yet but it’s expected to come out in the near future.
Tasmania: The Tasmanian Economic Regulator's determination for the 2022-23 financial year isn't out yet. It's set to be made later this month.
ACT: According to the Independent Competition and Regulatory Commission, tariffs are expected to decrease (yes decrease!) by an average of 1.25%. This would equate to an annual decrease of $23 for the average household.
Why are the prices increasing?
The Australian Energy Regulator has mentioned a few key factors that have led to the energy price increases:
The war in the Ukraine: Russia is a major world energy supplier. But the sanctions limiting the import of Russian oil and gas to countries such as the US, the EU and Australia have practically stopped our supply. This has spiked the global demand for gas, coal and oil from other nations. Because of the small supply pool, the prices for these commodities continue to grow. With two-thirds of Australia’s electricity supply reliant on coal power, the price hikes have had a major impact on us.
Unpredictable coal-fire and gas plant outages: There are a handful of reasons to why the plants aren’t functioning at full capacity, but the Resources Minister Madeleine King states some can be put down to ‘shutdowns for maintenance on ageing stations’.
Extreme weather conditions: The major flooding events that have occurred throughout NSW and Queensland have affected the supply of coal and the continued disruptions have led to the current shortages.
Increase in network costs in NSW: Two major players in the NSW energy market, Essential Energy and Endeavour Energy, elected to increase their retail pricing within certain distribution areas. This has encouraged other retailers to follow suit.
What is the Government’s plan to help fix this?
The Australian energy ministers have come together and have created an 11 point plan. Some of the major points announced were:
Fast-tracking the capacity mechanism. This will see energy consumers pay power providers to keep spare energy capacity in case it is ever needed.
Chris Bowen the Federal Energy Minister announced the idea to allow the Australian Energy Regulator to buy gas and keep it in storage for future emergencies.
There is also consideration to pull the so-called “gas trigger”, which will for force gas exporters to reserve some supply for the Australian market. But even if the tigger were pulled today, it wouldn’t come into force until January.
So what can you do to help save on power?
Here are our tips that might help save you an extra buck on your power bills:
Call your energy providers and find out if you can get a cheaper plan. Or shop around for other energy plans. In some cases you can lock in a fixed-rate plan, meaning that costs won’t go up for 12 months, so you can relax over the coming year. AER has a tool for customers to compare prices in ACT, NSW, Queensland, SA and Tasmania.
Check your temperature settings:
Washing machines: Did you know that a hot cycle can use up to 10x more energy than a cold wash? Using a cold cycle can definitely help save money, but if you must wash on hot then keeping it below 60 degrees will also help.
Hot water systems: The recommendation from the Federal Government is to set thermostats to 60 degrees celsius for storage hot water systems and no more than 50 degrees in instantaneous systems.
Air conditioners: When heating keep the temperature between 18-20 degrees and for cooling between 25-27 degrees.
Keeping draughts out
Filling gaps that stop warm or cool air from escaping can reduce your power bill by up to 25% according to the Federal Government. Using door snakes, applying weather seals and using curtains can all make a big difference.
Take advantage of the sun
When the sun's shinning bright, open up curtains and blinds to warm up a winter room. Then when it starts to get dark, trap the warmth in the room by closing the curtains and blinds. This blocks out the cool air coming off the glass.
Install solar panels: As a long term investment it’s a great opportunity to prepare for rising energy bill costs and for any future energy crisis. You will be utilising the sun's energy and capitalising on the stored energy.
Switch it up or off
Replacing your shower head with a water efficient option. This will cut down on water heating and will use less water. The Federal Government estimates a family of four would save around $315 a year.
Switch to energy-efficient LED blubs, which use around 80% less energy than older style light blubs.
When you’re not using appliances such as washing machines, microwaves, TV, dishwashers, switch them all off at the wall.
The following information was sourced from: https://www.abc.net.au/news/2022-06-13/australian-electricity-prices-cap-state-saving-power/101137582
Extra sources used include: