WA residents have already received bad news on electricity prices, Victorians have now as well and the fate of other states may be revealed today.
Last week we mentioned regulated electricity prices in Western Australia were set to rise, which will see the McGowan Government clawing back some of its recently announced Household Electricity Credit. The increases aren’t huge, but WA residents and business have been subjected to a bunch of them in recent years.
In Victoria, the Essential Services Commission announced on Tuesday it had set the Victorian Default Offer prices to apply from 1 July 2022 to 30 June 2023. In short, average annual bills for households and small businesses on the default (standing) electricity market offer will increase by around 5 per cent; although impact will vary depending on the distribution area – for some the increase will be less, for others more.
Standing offers are arrangements electricity retailers must make available to domestic and small business customers who don’t take up a market offer. It also applies to the estimated 140,000 customers in embedded networks, such as apartment buildings, who often don’t have retailer choice. In that scenario, it’s the maximum rates that can be charged for supply and usage.
Electricity retailers must show the price of their market offers in comparison to the default, helping consumers to compare electricity plans. While standing offer customers are a minority, the offer sets the scene for all others.
The main reason for the increases:
“Forecast wholesale electricity prices are driving an underlying increase,” said Essential Services Commission pricing director, Marcus Crudden. “Rising wholesale prices for electricity account for almost two thirds of the increase in the default offer for households.”
For solar power system owners, increases in wholesale electricity prices usually mean an increase in feed-in tariffs, but the timing has been bad. The minimum Victorian feed-in tariff rate for 2022–23 was set on February 24 this year. This was just a couple of days before the poop really hit the proverbial in Ukraine – which is one of the factors in the increase as the situation drove up the cost of fossil fuels. Clapped-out coal fired clunkers failing or exploding haven’t helped.
Awaiting The Australian Energy Regulator
For those in South Australia, New South Wales and south-east Queensland, keep an eye on what the Australian Energy Regulator has to say soon – possibly today. The Regulator will be announcing how the Default Market Offer will look for 2022-23. And rumblings are that it could look pretty ugly.
UPDATE 10:15AM: The Regulator has determined residential default market offers will jump between 8.5% and 18.3% in New South Wales, 11.3% to 12.6% in south-east Queensland and 7.2% to 9.5% in South Australia. There are big increases for small business too.
Don’t Blame PM Albo (Yet)
If there is carnage, no doubt there will be howling that Labor is to blame and there will be calls for freshly-minted PM Anthony Albanese’s head. But any increase will have already been baked in.
And here’s an interesting thing.
Usually the AER releases Default Market Offer details on May 1. But supposedly it was put off until after the election to give the Regulator more time to crunch the numbers. Some suspicious folks may believe doing this was to enable the then-Morrison Government to continue claiming it had done great things with electricity pricing as part of its effort to get back over the line, but also leaving a nasty mess for Labor to explain if Albo bested ScoMo.
This would be a devious thing to do, but pretty clever.
However, the man who was Minister for Industry, Energy and Emissions Reduction until this week – Angus Taylor – reportedly denies such deviousness and we’ll just have to take him at his word I guess.
If on top of every other crappy thing that has happened in recent years you’re now absolutely sick to death of padding the pockets of electricity retailers, you certainly wouldn’t be alone. But in the words of the great philosophers Aerosmith – don’t get mad, get even. Get solar panels installed.
About Michael Bloch
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Hi, Michael.
Thanks for the contents.
But I’m curious why electricity bills increased due to wholesale price.
As far as I know, since there’s too much solar exports to the grid, wholesale spot market price falls under A$0, and often times facing negative prices.
And also AEMO already announced that they will limit the wholesale electricity price.
That used to be the case, but not so much any more. Wholesale prices have been going through the roof over the last 2 years or so.
Plus as people tend to use power in the evenings where electricity is much more expensive (usually at least 3 times the price, but on hot days it can go much, much higher), electricity retailers need to factor that into their prices as they are almost always making a loss on any electricity that is used during those times.
I’ve read about the recently announced energy price hikes coming to Victoria from 1/07/22, predicting increases of 5% or $100s.
But in my case, my retailer Powerclub has announced the following increases for me:
Energy usage from ==> 18.31c to 36.47c per kWh
Solar credit from. ==> -10.2c. to -5.2 per kWh
Using a spreadsheet analysis, based on my past 10 months’ consumption with solar panels, my energy bill is going from $95 to $752 ==> a difference of $657 (or a projected $850 more p.a).
So much for this 5% or $200 predicted increase touted in the media?
I hear you. I got an email from my retailer (Reamped Energy) telling me to bugger off as if I stay with them, my bills “may double”. The next day I got a follow up email and a text message saying the same thing.
I ended up switching to OVO Energy as they still have competitive rates (22c per KW), but I don’t know how long that is going to last for!
Tony,
isn’t that jumping the gun, or am I reading it wrong ?
I’m in Victoria and will probably wait to (1/8/22 ?) to see all the new pricing.
All the retailers I see are quoting 1 month minimum notice for another rise, so why the rush ?
My current mob has kindly offered to double my bill, the others probably won’t be different without a 12 month contract on offer.
As Guido say’s “what is this 5% of which you speak?”.
It probably is premature, but since I’m not locked into a contract with OVO Energy and because of their welcome offer, it actually worked out to be a little cheaper than what I was currently paying, I thought it was best to switch now and I can always switch again shortly after the 1st of August if a better deal becomes available.
Further to my earlier post, It took a little while but the truth has finally come out. These muppets were increasing their prices so much because whilst they were touting themselves as a member-only service selling energy at wholesale pricing, they were in fact a financial basket case.
Obviously, their financial modeling was up the creek and when they worked out they had to do something about it, their course of action was drastic increases to their pricing structure, way beyond the realms of what any other retailer was increasing their rates.
I assume their subscribers are leaving in droves. leaving them in a financial mess and they’re now closing. It looks like they have sold their customer base to another retailer and trying to refer customers to stay with that retailer.
I’m now using the Victorian Energy Compare website to find a competitive retailer.
Further update, so on 8th of July (3 days ago) an email advises Powerclub is closing and asking people to find new retailers with a gentle nudge towards a preferred retailer but no indication of when they are closing.
Now we get an email 30 mins ago advising that they are. closing their doors today, so I assume those who have not changed retailers will be switched to a Victorian Default Offer (VDO) with another retailer.
Disgraceful conduct by this organisation!
Thanks for the heads up!
It is interesting to note on AGL’s website that their Victorian solar customers are not eligible to receive a retail feed-in tariff if they are recipients of a feed in tariff under any government scheme. A few early solar installations should be getting a ‘government scheme’ feed in tariff until late 2024.
That is despite the Victorian regulator, ESC Victoria having a minimum retail feed-in tariff of 5.2 cents per kWh.