Energy default market offer will rise by as much as 9.7% from July 1

ABC NEWS (Australia)

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.

Transcript

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.

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