Did you know that most energy providers can change your electricity prices at any time? If you’ve found yourself inexplicably paying more for power lately and wonder why, a sneaky price hike could be the reason.
So, what are your rights as a consumer if a retailer increases the rates it charges you? We look at when an electricity company can increase the prices it charges, how it must notify customers, and what you can do about it.
Will my electricity rates increase?
Only customers on a variable rate contract can have their rates increased. Customers on a fixed rate plan initially pay more for energy, but their rates won’t change for the duration of the contract, usually two years.
Variable rate contracts take two forms – standing and market offers. The rates of both these offers are set by the retailers themselves, but standing offers are subject to state regulation, imposing limitations on when and how a retailer may change its pricing. The below table explains when standing offer rates are most likely to be adjusted.
|State||Frequency of rate changes||When rates change|
|Queensland||Every 12 months||July|
|New South Wales||Every 6 or 12 months||Usually January & July|
|Victoria||Every 6 or 12 months||Usually January & July|
|South Australia||Every 6 or 12 months||Usually January & July|
Market contracts are generally more popular than standing offers and tend to offer cheaper prices, but the main drawback is that your retailer can set its own terms as to when it changes its prices. That said, market offer rates will usually only change in line with adjustments to standing offer prices. The best way to think about it is:
- Standing offer prices can only change every 6 or 12 months depending on where you live
- Market offer prices could be changed at any time, so you’ll need to keep your eyes peeled
Energy companies set their prices with wholesale market conditions in mind. While larger retailers are likely to absorb any significant fluctuations in pricing in the short term, before later recovering any losses, smaller retailers may not be in such a fortunate position. Therefore smaller retailers tend to be more likely to adjust their market offer prices outside of regular cycles.
How will I know if my rates have increased?
All energy customers must be notified of any and all changes to their rates. It is required that customers on a standing offer receive notice at least 10 days prior to the effective date of the price variation. This notice must be published on the retailer’s website and in a local newspaper.
Energy retailers must also notify their market contract customers about any price increases. However, they have some discretion as to when and how these changes are communicated. Retailers must give written notice of changes to your rates and other charges via a message on your bill. Rather alarmingly, however, most retailers do not need to inform customers about price changes before they take effect, though notice must be given no later than your next bill.
Some energy companies allow customers to set up email notifications about any price increases. It may be worth asking your retailer how you can best keep updated of any changes.
How much will my power bill rise?
Electricity price variations reflect changing conditions in the wholesale energy market, as well as retailer and network distribution costs. Retailers weigh up these factors and decide how they will adjust their own prices. Rate increases won’t be uniform across all energy companies and some will increase prices by more than others. While it is difficult to predict exactly how much prices will rise, market conditions point towards significant price hikes in the next couple of years.
Be sure to check the specific rates you are charged for power supply and usage, as some retailers tend to hide expensive costs behind big conditional discounts.
What to do if your energy retailer has hiked your rates
If your retailer has increased your electricity rates, then it’s time to compare energy products to ensure you’re still getting a good deal. Most variable rate electricity contracts do not include exit fees, meaning you’re free to switch retailers whenever you wish. If you’re charged exit fees, then weigh up the costs – most contracts charge an exit fee in the vicinity of $20 to $50, so you may still save from switching if your electricity rates have hiked significantly. It may also be worth contacting your existing retailer to make sure you’re getting their best deal.
Most retailers are expected to increase their rates from July 1 this year, so customers should try to educate themselves of their options now and start thinking about how best to mitigate rising costs. You’ll find lots of helpful information via the link below.