What does a default power price change really mean for your bill?

Households and small businesses are being warned to brace for further power price pain from July 1 following a drafted significant increase for default electricity prices from the energy regulators.

Draft determinations from the Australian Energy Regulator (AER) and Essential Services Commission (ESC) revealed households on standing offer contracts could soon see their bill skyrocket by about 20% – as predicted earlier by industry leaders – in order to compensate for elevated wholesale costs experienced in the past year.

The drafted changes in question will only be applicable on the Default Market Offer (DMO) and Victorian Default Offer (VDO) in each respective state – which at current count, only applies to about 10% of households in New South Wales, Victoria, south-east Queensland and South Australia.

However, new Canstar Blue data has revealed that these changes could also heavily impact the bills and costs for the large majority of households in these areas that aren’t on the DMO or VDO prices.

So, how does a default price change impact my power bills?

For those on standing offers, a default price change will have a significant impact directly on your power bills, as these are the rates that you are charged with under your contract.

But for customers on a cheaper, market offer, this impact may be slightly more removed, depending on the increase your retailer chooses to pass on to you. This may be minimal, if the provider is hedged well within a pricing contract for its wholesale supply. If not, the increase could be on par with, or even significantly more expensive than, the rates passed onto default customers.

Canstar Blue has crunched the numbers to reveal what these changes might look like if the AER and ESC’s drafted increases were also added to the average single rate market offer electricity price in each respective state.

According to our research, customers across NSW, SEQ and SA on market offer plans could be looking at bill increases of as much as $464 annually from July 1, if prices were to rise as drafted.

The biggest price pains would be felt by households on NSW’s Essential Energy network, which encompasses the majority of country NSW, covering the likes of Tamworth, Grafton, Dubbo and Wagga Wagga.

Following this is SA, with annual increases of about $398 potentially on the cards, and NSW’s Endeavour Energy network – which covers Sydney’s greater west – with a further $382 price hike predicted.

Average Annual Market Offer Electricity Costs in NSW, SEQ and SA

Source: www.canstarblue.com.au. Based on single-rate market offer electricity plans on Canstar’s database; excluding solar-only plans. Annual costs calculated based on the estimated lowest possible price a representative customer would be charged in a year, assuming all conditions of discounts offered (if any) have been met. Representative customer based on the reference usage per AER. Year-on-year change based on the AER draft DMO prices for 2023-2024 released on March 15, 2023.

Across Victoria, households on market offers could anticipate an average $420 increase to their bills, if the same hikes drafted on the default price were applied.

Average Annual Market Offer Electricity Costs in Victoria

Source: www.canstarblue.com.au. Based on single-rate market offer electricity plans on Canstar’s database; excluding solar-only plans. Annual costs calculated based on the estimated lowest possible price a representative customer would be charged in a year, assuming all conditions of discounts offered (if any) have been met. Representative customer based on the reference usage per Essential Services Commission VDO. Year-on-year change based on the ESC draft VDO prices for 2023-2024 released on March 15, 2023.

Canstar Blue Utilities Editor, Tara Donnelly said the data served a warning to energy customers to prepare for further power price pain come July.

“Our Canstar Blue data echoes sentiments already raised by the AER and ESC in their draft determinations that significant power prices could be on the cards for Aussie households within the next four months,” she said.

“While customers on the DMO and VDO will ultimately feel the biggest pinch if drafted increases go ahead, it’s likely there will still be a significant price bugbear for those on market offers too, as retailers look to recuperate costs following last year’s wholesale market madness.”

Ms Donnelly reminded customers that staying vigilant and regularly comparing offers could help to reduce the burden of soaring power costs.

“There are still several providers offering discounts off the various Reference Price and VDO price in respective states for customers who are willing to make the switch. While these gaps may reduce in size if the predicted price changes go ahead, there’ll likely still be some savings benefits out there for those that keep an eye on the market.”

How much can I currently save off the DMO/VDO in each state?

Canstar Blue found that across NSW, VIC, SEQ and SA, households could save between $113 and $185 on average off their electricity plan by switching to one of the cheapest offers currently in market. The biggest savings are on offer to Sydneysiders who are willing to make the switch.

Below, we’ve listed some of the cheapest electricity plans currently available in the capital cities of each of the above-mentioned states, and how much you could be saving if you switched from a standing offer contract to one of these offers.

Electricity plans cheaper than the DMO in Sydney

Here are some of the cheapest published deals on our database for NSW. These costs are based on the Ausgrid network in Sydney but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. See here for further information on the Reference Price, which in this comparison assumes general energy usage of 3900kWh/year, meaning the Reference Price is $1,512/year for a residential customer on a single rate tariff. Use our comparison tool for a specific comparison. Our database may not cover all deals in your area, and please check retailer websites for up to date information. Pricing below is subject to change.

*Price assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Estimated price includes any conditional discounts that may be available. Pricing based on Ausgrid network in Sydney, but prices differ between distribution zones. March 2023.

Electricity plans cheaper than the DMO in Brisbane

Here are the cheapest published deals on our database for SEQ. These costs are based on the Energex network in Brisbane but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Plans are listed in order of lowest price first. This comparison assumes general energy usage of 4600kWh/year, meaning the Reference Price is $1,620/year for a residential customer on a single rate tariff. Use our comparison tool for a specific comparison. Our database may not cover all deals in your area, and please check retailer websites for up to date information. Pricing below is subject to change.

*Price assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Estimated price includes any conditional discounts that may be available. Pricing based on the Energex network in Brisbane. but prices will differ between distributions areas. March 2023.

Electricity plans cheaper than the DMO in Adelaide

Here are the cheapest published deals on our database for SA. These costs are based on the SA Power network in Adelaide but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Plans are listed in order of lowest price first. This comparison assumes general energy usage of 4000kWh/year, meaning the Reference Price is $1,840/year for a residential customer on a single rate tariff. Use our comparison tool for a specific comparison. Our database may not cover all deals in your area, and please check retailer websites for up to date information. Pricing below is subject to change.

*Price assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Estimated price includes any conditions discounts that may be available. Pricing based on SA Power network in Adelaide, but prices differ between distribution areas. March 2023.

Electricity plans cheaper than the VDO in Melbourne

Here are the cheapest published deals on our database for VIC. These costs are based on the Citipower network in Melbourne but prices will vary depending on your circumstances. We show one product per retailer, listed in order of lowest price first. Plans are listed in order of lowest price first. This comparison assumes general energy usage of 4000kWh/year, meaning the VDO is $1,292/year for a residential customer on a single rate tariff. Use our comparison tool for a specific comparison. Our database may not cover all deals in your area, and please check retailer websites for up to date information. Pricing below is subject to change.

~Price assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Estimated price includes any conditions discounts that may be available. Pricing based on Citipower network in Melbourne, but prices will differ between distribution areas. March 2023. 

Compare the cheapest electricity prices available now

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