Households still paying default power prices in New South Wales, Victoria, south-east Queensland and South Australia could see bills skyrocket by as much as 31.1% from July 1, as the energy regulators reveal their 2023-2024 draft determinations for capped prices.
Increases of between 19.5% and 23.7% have been predicted for the residential Default Market Offer (DMO) across the various distribution zones and tariff types in NSW, SEQ and SA by the Australian Energy Regulator (AER).
Victorians sitting on the Victorian Default Offer (VDO) have also been warned to brace for price hikes of about $426 or 31.1% annually come July 1, if the Essential Services Commission’s (ESC) draft determination is approved.
Why is the DMO and VDO predicted to rise?
The DMO and VDO in each respective state essentially act as the maximum price ‘cap’ a retailer can charge residential and small business customers. These pricing safeguards were initially designed to protect those customers who do not wish to or cannot actively participate in the energy market.
Both the AER and ESC stated that their drafted hikes for default power prices were a result of increased costs for generation and supply retailers faced in the wholesale market throughout 2022.
ESC Chair Kate Symons said the drafted increase reflected additional costs retailers had been dealt in their forward or hedging contracts for supply.
“The proposed increases to the Victorian Default Offer reflect a year of price volatility in the energy market, which is making it more expensive for energy companies to buy and supply electricity across Australia,” she said. “The dollar figure increases set out in the draft decision are in keeping with proposed default market offer increases announced in other jurisdictions today.”
Generational costs contribute to about 30-40% of the total DMO price, the AER stated, with the price of retailers’ forward supply contracts also taken into account.
While the AER states that forward contracts have seen a drop in price since the Federal Government’s coal and gas price intervention late last year, these costs still remain significantly higher than they were at the beginning of 2022.
According to the ESC, about 400,000 residential and 55,000 small business electricity customers are still paying default power prices in Victoria.
The AER stated that across NSW, SEQ and SA between 7.8% and 10.5% of residential customers and up to 19.3% of small business customers are still on a standing offer contract.
Both the DMO and VDO draft determinations are open for feedback until early April 2023. Pricing could be subject to changes before a final determination is released in late May 2023.
The finalised DMO and VDO will come into effect on July 1, 2023.
See what pricing changes could be coming in your state:
Draft DMO for NSW
If the drafted price change goes ahead, residential customers in NSW paying default power prices on a single-rate tariff could see their bills increase by between 20.9% and 22.2%, depending on their distribution zone, come July 1. This is equivalent to a yearly price hike of between $335 and $463 for these customers.
Small business customers are in for a slightly lower increase of between 14.7% and 19.9% across the various distribution zones.
NSW Drafted DMO Prices Residential Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Ausgrid | $1,847 | $335 (22.2%) |
| Endeavour Energy | $2,219 | $383 (20.9%) |
| Essential Energy | $2,555 | $463 (22.1%) |
NSW Drafted DMO Prices Residential Customers (controlled load)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Ausgrid | $2,578 | $465 (21.5%) |
| Endeavour Energy | $2,947 | $564 (23.7%) |
| Essential Energy | $3,022 | $532 (21.4%) |
NSW Drafted DMO Prices Small Business Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Ausgrid | $5,000 | $640 (14.7%) |
| Endeavour Energy | $4,535 | $753 (19.9%) |
| Essential Energy | $5,759 | $858 (17.5%) |
Source: AER Default Market Offer 2023–24 draft determination – March 15, 2023.
NSW electricity plans currently cheaper than the DMO
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3911kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Endeavour Energy network in Wollongong but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4913kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Essential Energy network in Coffs Harbour but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4613kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Draft DMO for SEQ
If the drafted price change goes ahead, residential customers in SEQ paying default power prices on a single-rate tariff could see their bills increase by 19.8% or $321 come July 1.
Small business customers are predicted to see an increase of 19.4%.
SEQ Drafted DMO Prices Residential Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Energex | $1,941 | $321 (19.8%) |
SEQ Drafted DMO Prices Residential Customers (controlled load)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Energex | $2,344 | $383 (19.5%) |
SEQ Drafted DMO Prices Small Business Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| Energex | $4,115 | $669 (19.4%) |
Source: AER Default Market Offer 2023–24 draft determination – March 15, 2023.
SEQ electricity plans currently cheaper than the DMO
Draft DMO for SA
If the drafted price change goes ahead, residential customers in SA paying default power prices on a single-rate tariff could see their bills increase by $401 come July 1.
Small business customers are predicted to see an increase of $1,151 year-on-year.
SA Drafted DMO Prices Residential Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| SAPN | $2,241 | $401 (21.8%) |
SA Drafted DMO Prices Residential Customers (controlled load)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| SAPN | $2,760 | $485 (21.3%) |
SA Drafted DMO Prices Small Business Customers (single-rate only)
| Distribution Network | 2023-24 Draft DMO Prices | Annual Increase |
|---|---|---|
| SAPN | $5,690 | $1,151 (25.4%) |
Source: AER Default Market Offer 2023–24 draft determination – March 15, 2023.
SA electricity plans currently cheaper than the DMO
Draft VDO for VIC
Residential customers in Victoria paying default power prices could see their bills rise by about $426 on average. This draft estimates a yearly price jump from $1,403 to $1,829 for household power bills.
Small business customers are estimated to see a $1,738 price hike, which would see bills go from $5,620 to about $7,358 on average annually.
ESC Drafted VDO Prices Residential Customers
ESC Drafted VDO Prices Small Business Customers
Victorian customers, however, have been reminded that they can access additional energy bill support via the state government’s $250 power bonus, which re-launches on March 24.
VIC electricity plans currently cheaper than the VDO
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Jemena network in Sunbury but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the United Energy network in Frankston but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Powercor network in Bareena but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the AusNet network in Warragul but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.
Does this mean all power prices are going up?
AER Chair Clare Savage said the drafted default power prices should not be seen as the ‘best offer’ for energy customers, but rather a safety net against ongoing market volatility.
“Energy prices are not immune from the significant challenges in the global economy right now; that’s why it’s more important than ever that we strike a balance in setting the DMO to protect consumers as well as allowing retailers to continue to recover their costs and innovate,” she said.
“We know many households and businesses are already struggling with cost-of-living pressures. This is certainly a challenging environment for people to hear that further electricity price rises are on the horizon.”
Despite the estimated increases, Ms Savage still encourages customers to regularly compare plans and prices in market to ensure they are getting the best deal possible for them. Those struggling to pay their bills have also been encourage to contact their retailer for further assistance.
Image credit: ArtisticPhoto/Shutterstock.com, Essential Services Commission
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