Energy prices: National cabinet outlines plans to relieve household bills
It has been heavily speculated that potential energy bill relief is on the way. Here's what the national cabinet finally decided.
The national cabinet's agreement won't result in immediate energy bill relief for Australians in time for Christmas.
However, the states and Commonwealth will co-fund power bill assistance worth $1.5 billion for households and small businesses.
This will come into effect in the second quarter of 2023 and hopefully soften the blow before the peak of winter.
This news comes after both NSW and Queensland finally agreed to price caps on coal and gas for 12 months when federal, state and territory leaders met on Friday afternoon.
The rebates will be funnelled directly through to energy bills by each state to avoid any impact on inflation. There won't be any cash handouts.
"We won't do anything to fuel inflation…so anything we do will be seeking to reduce the bills before they arrive at the letterbox of the consumers," energy minister Chris Bowen told ABC Radio on Friday.
According to The Australian, the rebate in NSW could be around the $280 mark. We will update you when we know more about the exact figures.
Is there any other energy bill relief on the cards?
The price caps on coal and gas could also help ease energy bill stress next year.
The Default Market Offer (DMO) for electricity, which comes into effect each year on 1 July, will hopefully be lower than anticipated. The first draft of the DMO will be issued in February 2023.
- Good to know. The DMO or reference price is set by state governments as a benchmark to help Aussies compare energy plans. It impacts electricity customers in New South Wales, Victoria, South East Queensland and South Australia. In Victoria it's known as the Victorian Default Offer.
ACCC predicts energy bills will continue to rise
The Australian Competition and Consumer Commission's (ACCC) latest Electricity Market Inquiry Report says energy prices for consumers and businesses are highly likely.
Some key information for energy users includes:
- Market offer prices have increased. These are set by retailers and what 90% of Aussies usually sign up to. They've traditionally been cheaper than standing offers set by state regulators.
- The ACCC found that market offer prices between April 2022 and October 2022 raised the median annual bill of a typical household by 23% or $300 per year.
- There are signs energy prices will increase further. The Australian Energy Regulator has already warned there's likely to be a 35% rise by 2023.
- The number of discounted market offers available to residential customers has gone down. In October 2022, the typical range of market offers across all National Electricity Market regions was within 8% of the default offer.
- There are clear signs small retailers are struggling to keep up. Since May, we've already seen 6 retailers exit the market or urge their customers to switch to another provider.
- With fewer retailers offering energy plans and giving more power to bigger providers, a lack of competition will mean people will end up paying more for their electricity or gas over time.
So, what can you do to keep energy bills down?
There are a few changes you can make to avoid an energy bill shock going into the new year:
- Compare energy plans. In some states, the difference between the cheapest and most expensive plan is $200–$300 per year.
- Take advantage of other energy rebates and concessions. According to a new paper released by the Consumer Policy Research Centre, hundreds of thousands of eligible Aussies seem to be missing out on energy bill concessions worth up to $372 per year.
- Heating and cooling can make up 40% of your energy bill. Invest in energy-efficient appliances to keep your bills down in the long term and don't leave them on for longer than you need.
- Set your thermostat this summer to 24–25 degrees. Every extra degree below that can add 10% to your energy costs.
- Turn off appliances by the wall. Even appliances on standby mode can end up costing you. Save $100 over the year by switching them off.
- Take advantage of sunny days and ditch the power-guzzling clothes dryer.
Ready to take control of your bills? Check out our guide to cheap energy plans in Australia to compare your options.