Electricity price relief coming for Australians struggling with cost of living
The cost of electricity is set to go down for hundreds of thousands of Australians after the country’s energy regulator (AER) handed down its draft decision for the 2024-25 financial year.
The AER’s Default Market Order (DMO) sets the maximum price energy retailers can charge customers on default contracts - known as standing offer contracts. The DMO applies to small business and residential customers living in New South Wales, South Australia and South-East Queensland.
A draft determination for the next financial year has been released and it’s good news for people struggling with the cost of living.
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The AER has revealed prices "will be less than the rate of inflation" and the majority of residential customers could see reductions of between 0.4 to 7.1 per cent. The remaining residential customers could have slight increases in prices of 0.9 to 2.7 per cent. This will depend on their region and whether they have a controlled or uncontrolled load.
Most small businesses are also expected to get a win, with expected price reductions of between 0.3 and 9.7 per cent. Others could see an increase of around 0.7 per cent, depending on their region.
The changes could save customers hundreds of dollars a year.
AER chair Clare Savage said the 2024-25 determination was based on several factors, including wholesale and network costs, and environmental and retail costs.
“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," she said.
"In light of this, the AER has, in this decision, placed increased weight on protecting consumers. While wholesale markets have stabilised since their extreme peaks of 2022, this easing has been offset by the pressures we are observing in network prices. Poles and wires costs are a large component of retail prices, comprising around 40 per cent of the price."
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Savage added that there were some very good deals out there for customers.
“The median market offer has dropped by between 1 per cent and 5 per cent across most electricity distribution zones since December 31, 2023, and the most competitive market offers are now 18 per cent – 23 per cent below the DMO price," she said.
