Millions of Australians could see their electricity bills fall under new draft default prices released by the Australian Energy Regulator (AER). The regulator’s draft Default Market Offer proposes residential electricity prices would drop by between 1.3 and 10.1 per cent depending on where you live, while small business prices would fall by between 7.6 and 21.2 per cent.
For households, the biggest savings flagged are in New South Wales, where bills could fall by up to 8.2 per cent, or $226 a year. In South East Queensland, households are set to save 10.1 per cent, about $216 a year, from July 1. In South Australia, residential prices are expected to fall by 1.3 per cent, roughly $31 a year.
The AER is an independent body that sets electricity and gas prices across NSW, South East Queensland and South Australia. It sets the maximum prices providers can charge households and small businesses, and also helps manage the wholesale market. The Default Market Offer, due to be finalised in late May, acts as a price cap for customers on default plans.
Energy Minister Chris Bowen said falling prices were linked to the growing role of renewables in the energy system, with about 51 per cent of the grid currently supplied by renewable power. “Where those prices are regulated they are coming down,” he said.
AER chair Clare Savage said the Default Market Offer is designed as a safety net rather than the very cheapest deal, and she encouraged people to check whether their current plan still stacks up as prices shift. “The Default Market Offer may not be the cheapest electricity plan available, but it provides a fair and reasonable option for someone who hasn’t or doesn’t want to engage in the market,” she said. “With prices coming down, it is also important to check that any competitive offer you may be on currently remains the best one for you. “Staying on an old offer past 1 July could mean you are paying more than necessary.”
The announcement follows a separate proposal in Victoria, where the Essential Services Commission has put forward a 3 per cent reduction to the Victorian Default Offer, the state’s electricity price cap. Under that proposal, households would save about $46 a year, while small businesses could save 5 per cent, around $172 a year. Western Australia, Tasmania, the ACT and the Northern Territory have separate arrangements and are not covered by either the Default Market Offer or the Victorian Default Offer.
Speaking after the AER’s draft decision, Mr Bowen said any easing was welcome, but acknowledged cost of living pressures remain. “Anyone of goodwill will welcome a reduction of energy prices of this order,” Mr Bowen said.
Electricity prices have been a major factor in inflation, with the latest Consumer Price Index data showing electricity costs rose 32.2 per cent in the 12 months to January. The Australian Bureau of Statistics attributed much of that spike to the ending of various state and federal rebates, including a national $75-a-quarter saving. When the impact of government rebates is excluded, electricity prices rose 4.5 per cent over the year to January, reflecting annual retailer price reviews.
Alongside the draft price changes, the AER determination includes a new opt-in plan aimed at helping households use more power when solar supply is strongest. The Solar Sharer Offer would provide three hours of free electricity during peak solar generation, from 11am to 2pm in NSW and South East Queensland, or from noon to 3pm in South Australia. The idea is to shift energy-hungry tasks such as running major appliances or charging an electric vehicle into the free window. The trade-off is that for the other 21 hours of the day, customers who opt in would pay between 1 and 4 cents more per kilowatt hour.
Mr Bowen said the proposal is intended to share the benefits of plentiful daytime solar more widely. “The energy companies will be required under law to give three hours of free power when the sun is shining at its brightest and power is at its cheapest,” Mr Bowen said. “Consumers, whether they have solar panels or not – or are renters- should be able to benefit from that and that is reflected in the default market offer.”
