Australians urged to shop around as regulators flag lower electricity prices

A new government plan details how the nation will lower power bills and achieve climate targets.

A new government plan details how the nation will lower power bills and achieve climate targets. Photo: TND

Australians are set to enjoy long-awaited utility bill relief in 2024 after regulators suggested lower electricity prices for most default offers in the interests of “protecting consumers”.

Draft decisions published on Tuesday by the Australian Energy Regulator and Victoria’s Essential Services Commission flag price falls between 0.4 per cent and 7.1 per cent – though some families could still see prices rise up to 2.7 per cent as soon as July.

Default market offers (DMOs) are regulated prices that act as a de facto ceiling on the market, directly affecting bills for millions who don’t shop around and many more indirectly.

The AER, which sets DMO pricing for New South Wales, south-east Queensland and South Australia, said the price falls come amid easing wholesale prices, though network costs have shot upwards.

“We know that economic conditions have put pressure on many Australians and the increases in electricity prices over the last two years has made energy less affordable for many households,” AER chair Clare Savage said.

“In light of this the AER has, in this decision, placed increased weight on protecting consumers.”

The ESC, which sets default offers in Victoria, offered a similar explanation for a proposed 6.4 per cent ($112) reduction that will affect about 360,000 Victorian households directly.

A prospective fall in default offer prices will be welcome news for families who have been squeezed by massive power bill hikes over the past two years amid high commodity prices.

Even those who don’t sit on a standing offer will benefit because retailers set all prices in reference to the default offers, and are required to compare to it in consumer marketing.

But consumers who shop around and avoid paying the default offer will save most, as most retailers have plans that offer significant discounts on regulated prices, the AER said.

Savage explained that median market offers have fallen between 1 per cent and 5 per cent in most distribution zones in 2024, offering discounts up to 23 per cent on the current DMO.

“Most retailers have cheaper deals on offer, so shopping around remains the best way to get the best price,” Savage said.

Compare the Market’s head of energy Meredith O’Brien said market offers are increasingly attractive for consumers, underlining the importance of comparing plans before settling.

“Electricity prices in the National Electricity Market were down around 50 per cent on the previous year in many jurisdictions,” O’Brien said.

“So it’s great to see that our energy regulators are forecasting that these savings will be passed onto consumers for the most part.

“We’ve also seen some of our major energy retailers posting record profits, so it makes sense that many consumers could be offered relief in the form of lower bills from 1 July.”

Not all consumers are set to see default prices fall, however, with those in the Energex distribution zone in northern NSW and south-east Queensland set to see a 2.7 per cent rise.

In some areas higher network costs – poles and wires – are pushing prices up amid higher interest rates and inflation shifting the calculus on capital returns for network operators.

Tuesday’s decisions are drafts; a consultation process will now kick off during which power networks, retailers and consumer advocates give feedback on the regulator rulings.

A final decision is due in May, with the 2024 DMOs set to come into force from July 1.

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