It has been confirmed that electricity costs for homes in New South Wales will rise by as much as 9 percent.
Even with a decline in overall inflation rates, rising costs might result in a significant reduction—hundreds of dollars—in disposable income for certain families.
Climate Change and Energy Minister Chris Bowen discussed the price increase during a press conference on Thursday morning.
Based on an analysis conducted by Canstar, Australian families can expect their electricity bills to increase by approximately $200 beginning July 1st.
Sally Tindall, the Canstar Blue data insights director, referred to it as a "sucker punch" and unexpected bad news amid a cost of living crisis.
"Rising electricity prices affect nearly everybody, however, they hit people with lower incomes the hardest since these families have to spend a larger portion of their earnings just to maintain power in their homes," she explained.
As Canstar suggests, The Australian Energy Regulator (AER) has issued its most recent draft of the default market offer (DMO), outlining the highest prices that residents in New South Wales, South Australia, and Southeast Queensland may have to pay.
According to the proposal, electricity costs for homes might increase by 2.5 to 8.9 percent based on the location of the household.
Small business customers might experience increases ranging from 4.2 to 8.2 percent.
According to Canstar, this will set the average NSW household back a further $200 a year on their electricity bill.
Canstar noted that although prices are increasing, they represent the highest amount that electricity retailers are permitted to charge customers under standard contracts, commonly referred to as 'standing offers'. Even though only a minority of consumers use standing offers, providers also offer market deals, which tend to be more competitive yet could still be affected by these adjustments.
Clare Savage, the AER chair, stated that it continues to be a difficult period for energy consumers, especially those affected by Tropical Cyclone Alfred.
"We understand that the increasing living costs are a major concern for numerous households and small enterprises," she stated.
"We've observed rising expenses for almost all parts of the standard market offer, and we have thoroughly examined these to guarantee that the prices accurately represent the costs incurred by retailers in supplying electricity," stated Ms Savage.
The head of Energy Consumers Australia, Brendan French, stated that his organization was dismayed regarding the recent increase in prices.
"The DMO is established to safeguard individuals, especially those in precarious situations, from facing excessively steep electricity costs. If it charges as much as 25 percent more than rival offerings, it isn’t functioning efficiently," stated Dr French.
The Australian Energy Regulator finds itself in a challenging position due to ongoing fluctuations in wholesale prices and continually increasing network expenses.
"But we will keep urging the AER to take all necessary steps to make sure networks operate at minimal cost, as well as ensuring that the retail part of the DMO removes any superfluous marketing and additional components," Dr French stated.
The Essential Services Commission (ESC) released its draft decision regarding the proposed hike in the Victorian Default Offer (VDO) on Thursday.
The commission suggested that typical annual electricity expenses should increase from $1655 to $1667, representing a 0.72 percent hike, for consumers who use an estimated 4000 kWh annually—the average consumption level statewide.
As per the ESC proposal, certain Victorian households might see their power costs decrease by $19, whereas others could experience an uptick of as much as $68 based on which zone they reside in.
Companies are expected to pay an additional 3 percent on average.
Much like the reference pricing mechanism employed in other states, the Victorian Default Offer (VDO) serves as a protective measure for Victoria residents who have 'standing offer' agreements with their electricity supplier. It also safeguards consumers whose rates are either capped or subject to market competition.
Approximately 337,000 households and 56,000 small enterprises fall under the VDO, which likewise establishes the highest pricing for residences and businesses inside an integrated network.
After Thursday's announcement, The Australian Council of Social Service, Antipoverty Centre, Anglicare Australia, The Australia Institute, and the Consumer Law Action Centre have penned an open letter to the government requesting over $300 million in energy debts be waived for 331,750 households.
The co-director of the Antipoverty Centre, Jay Coonan, stated that energy firms are profiting enormous sums while typical Australians are facing difficulties.
Energy firms have demonstrated their reluctance to prioritize disadvantaged consumers over profit margins," he stated. "It’s now up to the government to intervene and assist individuals trapped in debt cycles as well as those of us who must decide whether to keep our residences at a comfortable temperature or manage unaffordable energy expenses.
The increase in electricity costs came after significant rises of nearly 40 percent during the fiscal years 2022-23 and 2023-24, but saw a halt in 2024-25.
Electricity prices dropped by 9.9 percent in the December quarter and decreased by 25.2 percent compared to the previous year, as reported by the Australian Bureau of Statistics.
This reduction occurred thanks to rebates provided by both state and federal governments; otherwise, electricity prices would have increased by 0.2 percent in December.
The federal government allocated $3.5 billion for energy bill assistance, giving each household a $300 rebate through $75 installments paid out four times annually. Small enterprises qualifying for this program were granted a $325 rebate.
Both are set to conclude on April 1.
According to Canstar Blue's study, half of Australians believe that the $300 government incentive ought to persist, whereas an additional 34 percent feel that assistance should continue but with a means test implemented.
The Canstar Blue data and insights director, Sally Tindall, noted that it wasn’t surprising Australians sought additional assistance since the previous batch of rebates was about to expire.
"Tally your monthly savings and set aside that additional money in a secure spot for when you face the truth about your actual electricity bill," she advised.
Ms Tindall stated that numerous Australians might be paying too much for their electricity bills, as sticking with the same provider usually resulted in higher costs.
Based on data from Canstar Blue, families in Sydney might save as much as $386 annually by shifting from an average-cost plan to the most affordable option available. In contrast, homes in Melbourne and Brisbane stand to benefit with savings of around $319 and $445 each year, respectively—this amounts to possibly $145 more compared to the entire federal subsidy provided.
"If the government decides to extend an olive branch regarding electricity, consider changing to a more advantageous energy plan – you might find that redirecting this additional money elsewhere in your budget could be beneficial," Ms Tindall stated.
Daily, everyday Aussies are having to pick between getting meals on their plates and paying their power bills, new research has found.
Of the 1011 individuals polled by the Australian Council of Social Service, half reported that they were missing meals and foregoing medications to ensure their air conditioning or heaters remained operational.
Others mentioned they were offloading their possessions or utilizing buy now, pay later (BNPL) services to manage their soaring electricity costs.
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Some opted for not using any heating or cooling systems at all within their homes as a way to reduce energy consumption.
Von, a 62-year-old resident of the Central Coast in New South Wales who receives the disability pension, mentioned that using the air conditioner was not feasible for them.
Von mentioned that he wakes up very early every day to monitor the weather. He doesn’t have the option to open his windows due to blackout curtains, so instead, he uses a floor fan in each bedroom which provides some cooling relief. However, affording air conditioning isn't feasible for him.
"Trying to sleep is unbelievable. I take cold showers in the middle of the night to cool down and use wet towels.
"It's hard to clean the house because it's too hot. Cost is a huge factor."
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A 61-year-old man from Melbourne named Euan, who also receives the disability support pension, mentioned that nights during the warmer seasons can be "awful."
He mentioned that they do have a stationary air conditioner installed in the master bedroom, however, the two children's rooms become extremely warm during summertime and remain so.
Each day feels like a struggle for me, particularly when the warmth intensifies during the nighttime.
The house exceeds 40 years of age, and the windows are outdated with single-pane design.
According to those surveyed by ACOSS, people are reducing their usage of lights and air conditioning, cutting down on shower times, or disconnecting major appliances to lower their energy costs.
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"It’s utterly disgraceful that in one of the globe’s richest countries, individuals are falling ill, missing meals, and postponing doctor visits due to an inability to pay for heating and electricity in their homes," stated ACOSS CEO Dr Cassandra Goldie.
The Australian Council of Social Service (ACCOSS) is urging the federal government to finance energy improvements for all 437,700 social housing units by the year 2030.
Goldie emphasized, "There is an urgent need to assist individuals in enhancing the thermal efficiency of their homes, transitioning to electricity, and utilizing rooftop solar panels along with home batteries." He added, "The greatest support should be directed towards low-income households and those belonging to Indigenous communities."
From July 1, energy bill costs are expected to increase following the release of the Australian Energy Regulator’s (AER) draft decision regarding the “default market offer” (DMO).
The typical home could see their yearly electricity costs rise by up to an additional $200 annually if the limits on prices for consumers on basic plans are removed.
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