Households in the Australian Capital Territory have received a small mercy when it comes to ongoing power price pain, after the ACT’s economic regulator revealed its default costs would stray from the status quo and rise no more than 5% this July 1.
The ACT’s Independent Competition and Regulatory Commission (ICRC) announced that regulated power tariffs – also known as standing offers – in the territory would increase by only 4.15% on average for households, making it the lowest increase of those currently scheduled for July 1 across eastern Australia.
In real terms, it means households still on standing offers in the territory would see average electricity bill increases of about $75 per year – a far cry from the up to 25% price rise expected for households across New South Wales, Victoria, south-east Queensland and South Australia on a similar tariff.
ACT’s small business customers are also anticipating minimal changes, with only a $289 yearly bill hike expected on average.
ICRC Senior Commissioner Joe Dimasi said while prices were increasing, the territory was saved from significant hikes thanks to a reduction in its own government scheme costs.
“The price increase is driven by a significant increase in wholesale electricity costs this year,” he said. “This increase will be largely offset because the ACT Government scheme costs have decreased substantially this year resulting in a rebate to customers.”
Part of the ACT Government scheme includes the Large-scale Feed-in Tariff scheme, which covers the cost of sourcing renewable energy from large-scale wind and solar farm generators in the ACT, SA, Victoria and NSW. These costs are agreed upon as a fixed contract and can be set above or below wholesale energy prices; however, when the wholesale price is below the contract price, the ACT distributor, Evoenergy, pays a top up.
In turn, this also means that when the contract price is above the wholesale price, the distributor will instead earn a return from the generators. This was the case for the 2023-2024 regulated price decision, with the significant spikes in wholesale electricity prices experienced throughout 2022 now earning Evoenergy a substantial return on its contract prices.
This overdraft will now be paid back to ACT electricity customers through a lower regulated price in 2023-2024.
Electricity networks costs for ACT households and businesses have also been lowered as a result. These costs usually contribute between 40% to 60% of costs associated with electricity bills.
Mr Dimasi reminded customers that while the incoming change was only directly related to standing offers, it still remained a significant gain for ACT households and businesses.
“The regulated price increases mentioned only apply to standing offer tariffs. We encourage consumers to regularly compare these tariffs to other offers in the market.”
The changes will officially come into effect on July 1, 2023.
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What is the Independent Competition and Regulatory Commission (ICRC)?
The ICRC is the ACT’s statutory body that sets and regulates prices across the territory’s infrastructure services, including water and energy. The ICRC operates in a similar fashion to the Australian Energy Regulator (AER) and Essential Services Commission (ESC), in that it is responsible for determining the regulated price for household and small business electricity each financial year. These prices are updated every July 1, in line with default price changes that occur in NSW, SEQ, SA and Victoria at the same time.
The ICRC first established its current regulated pricing structure in October 2021.
Image credit: Alina Kruk/Shutterstock.com
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