Australian households are set to pay $200 more per year for electricity starting July 1, as rising costs continue to strain budgets amid the cost-of-living crisis. The latest analysis by Canstar Blue warns of upcoming price hikes, while consumer groups call for more government support to ease financial pressure.
New electricity price hikes: What to expect
The Australian Energy Regulator (AER) has released its draft default market offer (DMO), which sets the maximum amount electricity retailers can charge households in NSW, South Australia, and South East Queensland under default contracts.
These are known as standing offers, which apply to customers who have not actively chosen a market offer. Under this proposal, electricity bills for households are expected to increase between 2.5% and 8.9%, depending on location. Small businesses will also face price hikes ranging between 4.2% and 8.2%.
In NSW, the average household will see an additional $200 per year added to their electricity costs. While only a small percentage of customers remain on these standing offers, market offers—often more competitive—are also likely to be affected by these changes.
Why are prices going up?
Despite electricity prices falling by 9.9% in the December quarter and 25.2% year-on-year, these reductions were driven by government rebates. According to the Australian Bureau of Statistics (ABS), without these subsidies, electricity prices would have instead increased by 0.2% in December.
Energy market regulators point to continued wholesale price volatility and rising network costs as key reasons for the price hikes. Clare Savage, chair of the AER, said cost pressures exist across nearly every component of the default market offer, and the regulator has carefully scrutinized pricing to ensure it reflects reasonable retailer costs.
Canstar Blue’s warning: The impact on vulnerable households
Sally Tindall, Canstar Blue’s data insights director, called the price hikes a “sucker punch”, particularly for low-income households. She noted that electricity price increases affect everyone, but the burden is heavier for lower-income Australians, as they dedicate a larger portion of their earnings to keeping their homes powered.
Government rebates ending soon
To ease past electricity price pressures, the federal government allocated $3.5 billion in energy bill relief. Every household received a $300 rebate, distributed in four $75 quarterly installments, while eligible small businesses received $325 in rebates.
However, these rebates will end on April 1, meaning many households will feel the full force of rising electricity costs.
A Canstar Blue survey revealed that half of Australians believe the $300 rebate should continue, while 34% think government support should remain but be means-tested.
Consumer groups demand action on energy debt
Following the latest price hike announcements, multiple consumer advocacy groups—including The Australian Council of Social Service, the Antipoverty Centre, Anglicare Australia, The Australia Institute, and The Consumer Law Action Centre—have written an open letter to the government. They are demanding that more than $300 million in energy debt be forgiven for 331,750 struggling households.
Jay Coonan, co-coordinator of the Antipoverty Centre, criticized energy companies for prioritizing profits over struggling Australians. He argued that energy providers have failed to support vulnerable consumers, leaving many people forced to choose between keeping their homes at a safe temperature and paying energy costs they cannot afford.
Victorian households face a different pricing model
In Victoria, the Essential Services Commission (ESC) has proposed adjustments to the Victorian Default Offer (VDO), which sets a reference price for electricity bills. Under the draft plan, households with an annual usage of 4,000 kWh would see their electricity costs rise from $1,655 to $1,667, an increase of 0.72%.
The impact of the price changes will vary by region. Some Victorians will see a $19 decrease in their annual bills, while others will pay up to $68 more depending on their zone. Small businesses are expected to experience an average 3% increase in electricity costs.
Like the DMO in other states, the VDO is designed to protect consumers on standing offers, capping the maximum amount households and businesses in embedded networks can be charged.
However, Brendan French, CEO of Energy Consumers Australia, expressed concern that the system is not working effectively. He pointed out that some default offers are priced up to 25% higher than more competitive market deals, undermining their role in shielding consumers from excessive charges.
How you can lower your electricity bill
Many Australians may be overpaying for electricity simply by sticking with their current provider. Research from Canstar Blue suggests that switching providers could result in significant savings.
In Sydney, the average household could save $386 per year by moving from an average-priced plan to one of the cheapest available options. Melbourne households could save $319, while those in Brisbane could reduce their bills by $445—which is more than the total government rebate that was previously offered.
Sally Tindall advises Australians to actively compare energy providers instead of waiting for additional government support. She encouraged consumers to reassess their electricity plans, stating that sticking with the same provider often leads to higher costs over time.
