Price hikes are hitting the electricity market across Australia from this Saturday, 1 July.
With experts predicting further rises, and with smaller energy retailers expected to go out of business in the coming months, householders across the country are acclimatising to a ‘new normal’ in an energy market that seems chaotic and confusing.
The impact of energy retailer closures
Two small retailers – the renewables-centric innovator Mojo Power and Brisbane-based QEnergy (both owned by Ion Holdings Ltd) – shocked around 12,000 customers, across Queensland, New South Wales, South Australia and Victoria when they were suspended from all trading on the National Electricity Market (NEM) on 17 June, according to notices published by the Australian Energy Market Operator (AEMO).
What did that mean for customers?
For all affected customers in New South Wales, Queensland and South Australia, the Australian Energy Regulator (AER) initiated the Retailer of Last Resort process to enable their transfer from the doomed electricity retailers to ensure a continuous supply of essential energy services. This followed the official wind-up orders made in the Supreme Court of Queensland on 15 June.
How does the Retailer of Last Resort process protect customers?
The Retailer of Last Resort scheme is designed as a safeguard to protect customers’ continuous supply to electricity or gas should a retailer suddenly close down.
The AER has the power to transfer customers to a new retailer (usually one of the major players, such as EnergyAustralia or Origin Energy).
Those customers are under no obligation to stay with the retailer to which they have been automatically transferred, but can stay with them if they choose, and don’t have to take any other action themselves.
For the 4880 Victorian customers of QEnergy – which included 3970 residential, 800 small business and 110 larger business customers – protection was offered in a similar form through the state’s own version of the Retailer of Last Resort scheme. In Victoria, the responsibility falls to the Essential Services Commission (ESC).
What is the ‘new’ normal?
Chiefly, he says, it’s because the “transition to clean energy is well behind where it should be”, something he says is a “failure of the previous government” because of its lack of positive action on renewable energy.
The result, he says, is that the wholesale market is “on a cliff edge”, with “generation assets running end-of-life before new assets can be deployed”.
Mr Coghran says that for the next two years – and perhaps longer – consumers will need to adjust to a new normal in which the volatile wholesale market will see more price rises and more smaller retailers falling by the wayside.
For lower income earners, especially, says Mr Coghran, it will mean “experiencing high levels of bill stress”.
Top tips to battle rising power bills
Today’s consumers face a variety of energy-related decisions, including solar versus no solar, whether to buy an electric vehicle now or wait, and whether to convert existing gas appliances to electricity. Learning how to negotiate with an energy provider for a better deal is another important issue.
To help, Mr Coghran has these practical tips:
- Don’t stop shopping around and comparing providers. Do it every time you receive a price rise letter, if not before.
- Consider solar. You can purchase the traditional way or look into a Virtual Power Plant (VPP) mechanism.
- Do the basics in terms of energy savings tips. Switching off or unplugging wherever you can – instead of leaving appliances on standby – will create some savings.
For people who can’t afford, or get access to technology such as solar energy options, batteries and heat pumps, getting left behind in the complicated nature of the energy market is a reality – unless government action delivers changes that offer protection. And with many experts pointing to the path to decarbonisation as the only logical way forward, the changes in the market are set to continue.
What changes have you made to be more sustainable in your energy choices? Have you had luck negotiating a better deal with your current energy provider? What cost-saving tips have helped reduce your own power bills at home? Share your experiences in the comments section below.