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$227 more a year: ‘Window of opportunity’ to avoid looming energy bill shock

energy prices and money
Energy prices will go up by as much as $227 for some customers, according to the energy regulator. (Source: Getty)

More than half a million Aussies are paying way too much for energy, which is tipped to get even more expensive due to rising wholesale prices.

Many Aussie households are currently languishing on what’s known as the “default market offer” (DMO), which is a ceiling price set by the energy regulator to stop retailers charging “unjustifiably high prices”.

Just by shopping around for a better deal, households could be saving around $443 a year, or 24 per cent, according to the Australian Energy Regulator (AER).

Now would be a good time to call up your retailer and ask for a better deal, with annual electricity bills set to go up by as much as $227 for some Australian households on the DMO price.

That’s according to new prices set by the energy regulator revealed this week, which will see safety-net prices across all states connected to the east-coast electricity grid go up.

The AER’s figures were meant to be released on May 1, prompting the incoming Energy Minister Chris Bowen to accuse the former Coalition Government of purposefully withholding this information until after the election.

“Angus Taylor and Scott Morrison knew that the result of their policies was Australians paying more in their power prices,” he said.

“They sat on this report, they approved its delay until after the election.”

The rise will see a $119-$227 for the 9.8 per cent of NSW households on the DMO, and a $165 rise for the 0.7 per cent of customers in south east Queensland.

In response to rising prices, the Queensland government has already announced a $175 rebate to help customers cover their next power bill.

South Australian customers will see the smallest increase of $124 more than last year for the 7.8 per cent of customers on the DMO.

Victoria, which sets its default market offers separately, also upped its safety net price by 5 per cent this week, which will see bills for the average Victorian household on the default electricity offer increase by $61.

A ‘difficult’ decision for the regulator

AER chair Clare Savage said this year’s decision was “particularly difficult” given the soaring costs of living.

However, the price of wholesale electricity, which makes up around 30-40 per cent of the total bill, has been rising steadily all year.

Retailers are facing wholesale prices double than what they were this time last year, with NSW and Queenlsand seeing the sharpest hikes.

Compare the Market spokesperson Chris Ford said prices of coal, oil, and gas were rising due to the conflict in Ukraine and other global disruptions.

Wholesale prices were also high due to less thermal generation because of unplanned outages and slowing investment in new capacity, the regulator said.

Increasingly ‘peaky’ demand - sharp highs and lows - was also driving up the cost of wholesale electricity contracts for retailers.

Ford said the recent floods were also having an impact.

Many people fall onto the safety-net price without realising

Ford said people had a “window of opportunity” to secure a better rate.

He said prices would start climbing once the DMO offer was introduced to the market on July 1.

For people who prefer fixed rates, which tend to be higher than variable rates but provide some security for people worried about future hikes, he recommended locking in a deal before July 1.

He advised households to get into the habit of comparing prices regularly, noting that it was easy to fall onto the DMO rate when your existing deal lapses.

He also said people should check their feed-in-tariff rates if they have solar, which can vary significantly.

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