Price hikes hit energy market from July

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?

According to Paul Coghran, general manager efficiency at Compare Club, a range of contributing factors have led the local energy market to its current state.

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.

Read more: How to beat the upcoming July energy price hike

Written by Claire Halliday

Claire is an accomplished journalist who has written for leading magazines and newspapers, such as The Sunday Age and Sydney Morning Herald, Australian Women's Weekly, Marie Claire, Rolling Stone, Australian House & Garden, GQ, The Australian, Herald Sun, The Weekly Review, Kidspot.com.au and The Independent on Sunday (UK).

5 Comments

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  1. Firstly install solar panels which cuts most peoples electricity bills by about 80% although that can vary widely depending on your situation. Solar hot water also works very well.
    Secondly avoid using air conditioning as much as possible as cooling and heating consumes a lot of energy. Having your home well insulated will assist with that.
    They are the two big ones if you want to cut your power bills.
    Then there are all the lesser things like using only LED lights and turning things off when not in use. And if you have kids train them not to waste energy as they are often big consumers since they don’t pay the bill.

  2. The nature of the recent price rises ie. a smaller increase in power charges but a large standing charge increase makes countering these costs even more difficult and confusing. Any reduction in power use will have negligable effect because the daily standing charge is a larger proportion of the bill. Installing solar is less attractive than previously because a smaller proportion of the overall bill can be reduced. In many cases installing batteries will now only be worthwhile if it’s intended to leave the grid.
    Quite apart from the cost increase this method of raising power charges runs counter to encouraging reduced power consumption and the trend to solar and is therefore against government policy and the National interest.

  3. Could someone please tell me why these energy mobs can justify these BIG price increases?
    I have not seen any logical report on why prices should increase by 80 – 100%.
    Please justify these increases.

  4. David Ryder. You claim that installing solar panels cuts most people’s electricity bills by 80%. Well under the new pricing my last bill would have comprised 43.2% standing charges so even if we installed solar and used no power after the sun went down or installed batteries our power bill could only reduce by 56.8%. The only way we could get anywhere near your claimed 80% saving is by vastly increasing our energy use which would be counter productive. Maybe you have the solution?
    So again this proves that the current pricing regime runs counter to thrifty use of electricity or installing solar or batteries because unless we come off the grid we are still left with significant standing charges which we can’t ‘thrift’ or ‘economise’ away. Our standing charge has increased by 21.45% which can in no way be explained away by increases in world energy prices (they have fallen substantially) or investment in new poles and wires. It can only be explained by government sanctioned profiteering and rip offs.
    You might recall that one of the Labor election promises was to go after the international price gougers and tax cheats. What have we heard about that since the election and the energy companies feature significantly amongst the offenders?

  5. Ronloby,
    They can’t justify these increased exorbitant prices. International energy prices have fallen and are still falling. The only way they can justify these high prices is because the government has done a deal with the energy companies to rip off consumers to ensure the Labor party’s coffers are kept full.
    If this is not true, then why has the government threatened to fight Rex Patrick in the court resulting from his FOI demand for a copy of the papers covering the recent power stitch up.
    As I said above before the election a top Labor priority was going after the corporate tax dodgers, they seem to have gone cold on that one, I wonder why?

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