Majority of Aussies aren’t happy with their energy deal, with double-digit price rises still to come

Australians increasingly think they’re getting a bad or mediocre deal on electricity and find it hard to predict what their next bill will be, Canstar Blue research has revealed, as the CEO of one of the country’s biggest power companies warned of further double-digit price increases in 2023.

Canstar Blue’s exclusive research found that just 37% of electricity bill-payers thought they were getting a good deal on energy in the three months to September 30, down from 44% in the same period last year. And 22% of Aussie householders said they found it hard to predict the size of their energy bill, up from 17% the year previous.

The survey of more than 2,000 people around Australia reflected the price surges experienced by bill-payers, with electricity bills surging 141% in the 12 months to January 2022, and doubling again in three months to June 30.

And there is likely to be more bill pain to come. Although the wholesale prices fueling recent bill increases have somewhat stabilised, householders on quarterly billing cycles are expected to face sky-high October bills after an increase to Default Market Offer (DMO) and Victorian Default Offer (VDO) regulated price caps for standing-offer plans on July 1.

Warning: Bigger bills are coming in 2023

Meanwhile, speaking at The Australian Financial Review’s (AFR) energy and climate summit this week, Alinta Energy CEO Jeff Dimery said he expected the energy rates paid by consumers to jump more than 35% next year. Mr Dimery based his 2023 forecast on increases in wholesale energy prices, due to factors including Russia’s invasion of Ukraine and the industry’s transition away from fossil fuels.

“When we run our modelling for energy pricing next year, using the current market prices, tariffs are going up a minimum 35%,” Mr Dimery said. “It’s unpalatable, nobody wants that, we don’t want consumers tearing up their bills and setting fire to them [but] that’s the reality of where we are headed, unfortunately.” 

While supply issues caused by the crisis in Ukraine have placed strain on energy markets worldwide, Mr Dimery also cited the financial impact of moving to renewable energy as an additional driver for future increases. Alinta is shutting down its Loy Yang B coal-fired power station, with plans to replace it with offshore wind farms and hydroelectric power. 

“What cost $1 billion to acquire is going to cost me $8 billion to replace,” he told the summit audience. “So let’s talk about that and still explain to me how energy prices come down, I don’t get it.”

At the same event, Energy Australia chief executive Mark Collette and Origin chief executive Frank Calabria each echoed Mr Dimery’s concerns about the investment needed for reliable renewable power. 

“Looking back at the first part of the energy transition over the last 20 years, Australia did pretty well, with up to 30 per cent renewables [with] a couple of significant power station closures,” Mr Collette said. “That was the easy bit. Looking forward, the next bit is hard.”

“I’d be delighted if we could get 43% [renewables] in 2030,” Mr Calabria said. “When you convert that into infrastructure, it’s an enormous challenge and we’re up for it, but the reality is we’ve got to work together because it’s actually going take a lot of hard work in a lot of different parts of the community to make it work.”

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Regulator: Average bills up $300 since April

According to the Australian Competition and Consumer Commission (ACCC), electricity bills have risen by a whopping $300 on average since April.

As reported by AAP, ACCC Chairwoman Gina Cass-Gottlieb told a parliamentary committee this week that although the price rise was explained by local and international factors, the ACCC would continue to watch for price-gouging from energy providers. 

Canstar Blue’s own data showed that average annual electricity prices on market-offer plans rose by almost 11% nationally between June 30, just prior to the July 1 regulated price increases to standing-offer plans, and August 1, when the retail market had adjusted its plan pricing to reflect the regulated increases. That was equivalent to an $187 rise in annual electricity bills in that period alone. 

Some states experienced larger increases in market-offer pricing, however; the average annual electricity bill in south-east Queensland and New South Wales rose just over 13% or $215 in the same period.

While other energy bosses acknowledged the stress on customers, only Alinta’s Mr Dimery gave a percentage estimate on price rises in 2023. In a statement to Canstar Blue, Momentum Energy Managing Director Lisa Chiba agreed that the trouble in the energy sector would continue, but did not want to speculate on how high prices were likely to rise.

“In periods of price volatility, our focus is on running as efficiently as possible and being ready and able to support customers who find themselves in financial difficulty.”

Labor: Renewables will bring energy costs down

The federal Labor Government has publicly committed to lowering residential and business electricity bills by $275 annually by 2025.

Speaking to the ABC’s 7.30 Report after the AFR summit, Climate Change and Energy Minister Chris Bowen agreed that the industry was under enormous pressure, but said the Labor Government’s commitment to renewable energy would lead to an eventual decrease in prices. 

“We will continue to implement the policies we took to the election which are all about getting more renewables into the system because they reduce emissions yes, but also … because they are the cheapest form of energy, as our market operator says, by a country mile, and more renewable energy means that energy prices are lower than they otherwise would be,” the minister told the ABC’s Sarah Ferguson.

When questioned over the potential for the government to intervene by introducing price caps in addition to default prices set by energy regulators, the minister deferred to the industry’s existing Australian Energy Market Operator (AEMO) regulations.

“Well, we have a system of rules in place already which we had to implement in the very early days of the new government. AEMO had to implement [the rules] working closely with me and with all the states and territories in the national energy market

“What I am saying is that we will continue to work with the operator and with the regulators to ensure that our regulatory regime is as fit for purpose as is possible against this challenging backdrop.”