It’s not a surprise, but it likely cause “bill shock” to quite a few. Around 600,000 Australians are set to see an electricity price hike of between 21% – 24% from July 1.
The Australian Energy Regulator (AER) announced the decision today. The AER sets the “default market offer” for Aussie households, which essentially dictates the electricity price of any utility customer on that default offer tariff.
The price increase is largely in line with the draft ruling set in March, albeit even higher than the initial flagged increase of between 20% – 22%. AER Chair Clare Savage noted that the price hike was lower than what was initially feared towards the end of 2022. However, that will likely come as cold comfort to many affected households.
“If they are a default market offer customer … the price increase will be between 19.6% and 24.9%“, said Savage. “It’s much lower than where we were fearing it could have been last September, October. But still obviously significant price rise for customers and difficult news at a time of cost of living pressure.”
Small businesses aren’t immune from the price hike either. They will face increases of between 14.7% – 28.9%.”
There is no doubt the political “blame game” will come into play today and throughout the week over the increase. But the underlying economic realities had a sense of inevitability about them. Russia’s invasion of Ukraine caused what the International Energy Agency described as the first “global energy crisis”. This sent prices for fossil fuels like gas soaring in many parts of the world, including Australia.
Gas-fired generators remain the “price setters” on Australia’s National Electricity Market (NEM) meaning higher prices on electricity markets, which must eventually flow through to end consumers.
This will likely be cold comfort to homeowners that will begin paying up to almost one quarter more on their electricity bills come the new financial year. But there is action that they can take and technologies at hand that can be deployed today.
It’s become a mantra of mine, but it becomes truer with every day. The single most effective thing households can do to avoid massive hikes in the cost of electricity, is install rooftop solar and tap Australia’s most reliable resource: abundant sunshine.
And to make the most of the solar power produced on your roof, a home battery storage system can allow you to use that energy when you need it most. We know that despite their rising costs, thanks to higher gas prices, utilities continue to pay pennies when it comes to the solar power you generate and feed into the grid. By storing it in a residential battery energy storage system, you can get full value from your solar power.
As a final note, it’s not only on the level of individual home where solar and batteries are proving to be the solution the current energy crisis. At the macro level, both the United States and the European Union are both turning to renewable energy in the face of high energy prices.
In the US, the Biden administration’s Inflation Reduction Act is providing big subsidies, in the form of tax credits, for investors in things like solar and energy storage of all shapes and sizes. And in the EU, solar installations grew roughly 45% in 2022, with signs that 2023 will be an even bigger year.
And the Australian government, in the Federal Budget announced a little over two weeks ago, made a big part of its Energy Relief Plan funds for cheaper finance for homeowners to carry out energy upgrades to their homes – which primarily means rooftop solar, home batteries, and the electrification of things like cooktops and heating.
“The Albanese Government is investing $1 billion to help finance household energy upgrades for over 110,000 homes. We know that not everyone has the funds required to unlock savings from energy performance,” tweeted Assistant Minister for Climate Change and Energy Jenny McAllister on May 9. “We’re making it easier to access financing that will make your home more comfortable and cheaper to run.”
An increase on your power bill of up to 24% will make for uncomfortable reading for many. Make the decision today to lock in lower power costs for years to come.