Yahoo Finance Falling energy prices? Don’t believe the hype - here's how you can save yourself
Waiting for Australian power prices to come down is now a futile exercise.
Australian households have been hanging out for some good news on power bills following the biggest two-year price hike on record but, today, they got a real fizzer.
It looks like there will be virtually no change to official electricity prices in 2024, despite the fact they’ve risen by 30-40 per cent over the past two years and wholesale prices have dropped in the meantime by 44-64 per cent.
The national energy regulator has announced its draft prices - to kick in from July 1 - and for the vast majority of postcodes, prices will go up or down by 1-3 per cent. That’s a difference of $20-$50 per year for an average-sized home. Victorians can be slightly happier, with a 6 per cent price drop, equal to $112.
While only about 10 per cent of homes pay this price, it sets the benchmark for all other offers on the market - so your plan could just as easily go up as down in July.
When it comes to electricity prices, Australian governments are like Mr Bean: just when you think they can’t find any new ways to screw it up, they surprise you.
The spin machine was cranked up to 11 this morning.
The news was leaked to some media, who gave favourable coverage, and Energy Minister Chris Bowen was on brekkie TV claiming victory. Headlines said: ‘Power prices to fall’. Much was made of a 10 per cent price cut for small businesses in some parts of NSW but, if you scratch the surface, that was an outlier.
Zone | Up/Down | How Much? |
NSW Ausgrid | Down 3% | -$54 |
NSW Essential | Up 0.9% | +$22 |
NSW Endeavour | Down 1.9% | -$43 |
SEQLD | Up 2.5% | +$53 |
SA | Down 2.5% | -$57 |
Just a few months ago, the regulator revealed average annual wholesale electricity prices had fallen by between 44 and 64 per cent last year, compared to the year before, and average annual east coast gas market spot prices fell by 43 per cent.
Looking at this graph in the report, households could have been forgiven for thinking the problem had been solved and energy prices might return to normal (household prices usually follow wholesale prices about a year later).
The regulator even said: “Both electricity and gas prices during the quarter remained well below the record prices of 2022 and were now closer to longer-term annual averages. Once retailers’ wholesale costs adjust to the lower prices going forward, prices faced by consumers should reflect these lower costs.”
But here we are in March and the verdict is: “Some up, some down”.
Also by Joel Gibson:
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This time around they’re blaming another part of the bill: network costs. These are the poles and wires that carry power to our homes from the power stations and substations.
If that rings a bell, maybe it’s because we used to blame networks for rising power prices.
“Between 2006 and 2013, the average Australian household power bill increased by more than 85 per cent: from $890 to $1,660 a year, with network costs being the biggest contributor,” the Grattan Institute reported.
Here’s a graph showing that massive price hike.
That unprecedented rise in power prices was topped only by the rise in the past few years. The Gillard government acted to prevent future overspend and we were led to believe that problem was fixed too.
Apparently, now the networks are being hit by inflation, higher interest rates and the need to build a new grid for renewables.
How to bring down your energy bill
So it should be abundantly clear that waiting for Australian power prices to come down is now a futile exercise: the only way is up. We need to take matters into our own hands. That means doing a few things:
Switch to a cheaper plan. The regulator said some plans were now “18-23 per cent below the DMO price”. So, if you’re paying the DMO, you’re a mug (and half of us are, according to data late last year).
Cash in on the range of credits currently available. As I’ve explained here, several retailers are offering $150-$300 upfront for switchers, and there’s nothing to stop you switching more than once a year. Sometimes, you can also score cashback when switching and double-dipping.
Claim any temporary concession or rebate you can at energy.gov.au
Go solar if you can. Solar customers have predictable bills and don’t have to rely on the government to come to their rescue.
