Electricity Costs Climb: Households Warned About Price Hikes

Australian households will face higher electricity bills from July 1, with some paying up to $200 more per year. The Australian Energy Regulator (AER) has announced its draft decision on the default market offer (DMO), which sets the maximum prices electricity retailers can charge customers on standing offers in New South Wales, South Australia, and South-East Queensland.

Figure 1: Increasing costs of electricity generation and transmission will drive up prices for Australian consumers this year. (Photo: Dave Hunt/AAP)

Households Brace for Rising Costs

Canstar Blue data insights director Sally Tindall described the hikes as a “sucker punch” during an ongoing cost-of-living crisis.

“Electricity price rises impact pretty much everyone, but they hurt those on lower incomes the most as these households are shelling out more of their income to keep the lights on,” she said.

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Under the AER’s draft determination, residential electricity bills will increase between 2.5% and 8.9%, depending on location. Small business customers could see their bills rise between 4.2% and 8.2%.

In New South Wales, the average household is expected to pay an additional $200 annually. Customers in Victoria will see either a small decrease of $19 or an increase of up to $68, based on their location. The Essential Services Commission (ESC) regulates Victoria’s electricity prices separately from the AER.

Government Response and Consumer Advice

Federal Energy Minister Chris Bowen acknowledged the burden on households.

“While today’s news is mixed, it does show energy retailers are responding to competition – with energy plans that are 25% cheaper than the DMO, it’s worth shopping around,” he said.

Bowen urged Australians to compare energy plans, noting that 80% of households were not on the cheapest available offer. The government has also been providing electricity rebates to ease the financial strain.

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The federal government allocated $3.5 billion in energy bill relief, with households receiving a $300 rebate in $75 quarterly payments. Small businesses received $325 in total. These rebates are set to expire on April 1.

Canstar Blue’s research found that 50% of Australians support extending the $300 rebate, while 34% believe it should continue but be means-tested.

Opposition Criticism and Rising Business Costs

Shadow Energy Minister Ted O’Brien blamed Labor’s energy policies for the price increases.

“Three years ago, Anthony Albanese and Chris Bowen promised cheaper power bills. Instead, they’ve delivered among some of the highest electricity prices in the world,” he said.

Opposition Leader Peter Dutton did not guarantee that power prices would be lower under a Coalition government. He expressed concerns about rising electricity costs affecting groceries and essentials.

Businesses and Consumers Urged to Act

Energy Consumers Australia CEO Brendan French criticised the price hikes, arguing that the DMO was not fulfilling its intended role.

“The DMO exists to protect people, particularly those in vulnerable circumstances, from paying disproportionately high electricity prices. It’s not working effectively if it is priced up to 25% above more competitive offers,” Dr French said.

He urged the AER to ensure electricity networks operate at the lowest cost possible.

Meanwhile, consumer advocates are calling on Australians to compare energy plans and switch providers to reduce their electricity costs.

According to Canstar Blue, Sydney-based households could save up to $386 annually by switching to a cheaper plan. Households in Melbourne and Brisbane could save $319 and $445, respectively.

“If the government does end up extending the electricity olive branch, don’t shy away from switching to a better energy deal – there’s plenty of other places in the budget that could benefit from the extra cash,” Tindall said.

The Road Ahead

Electricity prices have surged in recent years, with sharp increases of almost 40% in 2022-23 and 2023-24 before stabilising in 2024-25.

According to the Australian Bureau of Statistics, electricity prices fell by 9.9% in the December quarter and 25.2% year-on-year due to government rebates. Without the rebates, prices would have risen by 0.2% in December.

With government support set to end soon, Australian households will need to brace for higher costs and take proactive steps to secure more competitive energy deals.

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