Energy bills are set to fall from July – by how much depends on you
Residents in NSW, South East Queensland and South Australia could stand to save $65 million with the new price caps.
Hundreds of thousands of Aussies across New South Wales, South East Queensland and South Australia will be able to save on their energy bills from July. Together, the total amount of savings could equal a massive $65 million or more.
The news comes after the Australian Energy Regulator (AER) confirmed its final Default Market Offer (DMO) price cap for 2021-2022.
This will see price cuts for 727,000 customers on a standing offer with their energy providers.
If you're on the list, it's good to know the lower price ceiling will take effect from 1 July and your house or small business could see up to $116 or $441 in annual savings respectively.
If you're unsure, you can always check your energy bill or call up your provider to find out if you're on a standing offer contract.
You'll most likely be on one if you've been with your provider for a long while.
Here's a breakdown of household savings for each state:
- NSW: $53-$102
- South Eastern Queensland: $53
- South Australia: $116
But how can I get more savings than that?
If you're not after lengthy explanations, the key thing to remember is you should always compare electricity prices if you can.
AER Chair Clare Savage also put emphasis on this when announcing the latest price cap.
Most retailers have cheaper energy deals on offer, so shopping around remains the best way to get a better price.
You can start comparing energy prices using our Energy Finder™ tool. It's easy to use and will give you results in minutes.
Confused? We hear you.
Now you're probably shaking your head at this point. You get there are more savings to be had but what do DMO and standing offers really mean? And how can they help you compare?
We'll break down the jargon for you because these are important terms to understand if you care about the cost of your bills.
How does the Default Market Offer affect my energy bills?
The term Default Market Offer has been floating around since 2019 when the concept was first introduced. It's also often referred to as the reference price.
Savage says the DMO acts as a safety net to ensure Aussies get a basic service at a reasonable price.
It works by capping the price retailers can charge for electricity on a DMO contract.
The DMO is not designed to be the most competitive deal but rather it is a safety net for customers who don't or can't shop around when it comes to their electricity contract.
If you're keen to compare prices to find yourself a better deal, then the reference price is a good benchmark to go by.
What does a standing offer mean and how is it different from a market offer?
Almost 800,000 residents in NSW, South Australia and South East Queensland are on standing offer contracts according to the Australian Government.Here's a quick overview of how they stack up against market offers.
You're probably wondering how you got on a standing offer in the first place. The simplest explanation is that your market offer expired and you're no longer getting any discounts or incentives.
The electricity rate on standing offers is set by the AER who imposes limits on how much can be charged for electricity.
It's a no-frills contract but the benefit is that by legislation, prices can't change more than once every six months. Also by law, your provider will have to notify you of any price changes in writing and before implementing the change.
I get the gist. Let's recap how I save more money on my energy bills.
As we briefly mentioned above, the best thing you can do to bring down the cost of your energy bill is by comparing energy prices and then making a switch.
This will potentially beat the price drop from AER and give you higher annual savings (you can use the reference prices in the table below to compare):
|Total standing offer customers (December 2020)||2020-21 DMO prices||2021-22 DMO prices||Saving for average standing offer customer in 2021-22 from 2020-21||Estimated total savings|
|New South Wales (depending on distribution zone)||368,180 (11.1%)||$1462-$1960||$1393-$1907||$53-$102||$19,513,540|
|South-Eastern Queensland||175,453 (12.1%)||$1508||$1455||$53||$9,299,009|
|South Australia||68,873 (8.7%)||$1832||$1716||$116||$7,989,268|
Source: Australian Energy Regulator
All you need to start shopping around is have your electricity bill in hand. You'll need your usage data to compare prices. We have a guide to help you make sense of your energy bill.