Australia's energy regulator has confirmed the default market offer will rise by as much as 9.7% from July 1. New South Wales customers are expected to be the hardest hit, but electricity prices are also expected to rise across South Australia and Queensland.
Category
📺
TVTranscript
00:00With winter starting next month, some difficult news for consumers.
00:07As you say, the energy regulator releasing its default market office offer for 2025-26.
00:15So this is a safety net price for households and small business customers on standing offer
00:20plans and it will impact people in New South Wales, South East Queensland and South Australia.
00:27And it follows a draft determination in March and the regulator considered stakeholder
00:33feedback on things like inflation figures, economic forecasts, updated wholesale network
00:39and environmental as well as retail costs.
00:43So it made its final determination.
00:46Now this will come into effect from July 1.
00:49And this decision is a reference price for all other market offers in these regions.
00:55To give you a sense of some of these increases, I'll talk you through these hikes that will
01:01come into effect from July for residential customers in South East Queensland up to 3.7%
01:08of an increase, 3.2% in South Australia and that bigger increase of 9.7% in New South Wales.
01:16Now, small business customers will also expect it to experience an increase of around 0.5% to 8.5%.
01:26That is dependent on the region that they're in, Lorna.
01:30Pablo, what are the exact reasons then behind the spike?
01:33Well, put simply, it comes down to the transition, the upgrade to renewable energy, the cost of overhead
01:41transmission lines that are being established and ageing coal power plants, which are coming
01:47to the end of life.
01:49So this is something that the government has been trying to address as it transitions the
01:55energy grid as coal comes offline.
01:58We heard earlier from the chair of the Australian Energy Regulator, Claire Savage, who says,
02:04basically, the cost of producing and transporting power is changing.
02:10What we've seen is it's been stronger.
02:13So there's lots of things that go into a retail bill.
02:15The cost of making power, so in generation, has been higher in New South Wales.
02:20Retailers, the people who sell it to you, they buy forward contracts in their, again, sort
02:24of spot prices in the market.
02:26And those forward contracts have been higher.
02:28And some of that's to do with less reliable coal plant that's been running in New South Wales.
02:32So it can fall over sometimes and drive big price spikes.
02:36And we should stress that 9.7% increase in New South Wales is the worst case scenario.
02:42And not everyone is on a default market offer.
02:46Claire Savage saying that it was a difficult decision, but encouraging customers to shop around.
02:52We have also heard from the Energy Minister, Chris Bowen, releasing a statement saying that
02:58some areas of the default market offer that are impacted by this were not as high as anticipated
03:04in the draft prices that were released in March, but that he acknowledges that this is,
03:10will put added pressure on households, pointing to the energy bill relief that the government
03:15announced before the election to come in later this year.