The Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) both released their draft default market offers – essentially the maximum energy retailers are allowed to charge their customers – for the 2024-25 financial year.
Under the AER’s draft, residents in Sydney, Newcastle and the Hunter on the default offer will pay between 3 and 3.4 per cent less for electricity starting from July 1, those in Western Sydney, the Illawarra, and South Coast will see their bills drop by 1.9 to 7.1 per cent, and South Australians will receive a decrease between 0.5 and 2.5 per cent.
But it’s not all good news, with customers in the rest of regional NSW to get a small increase of 0.9 per cent, although others will see a drop of 0.4 per cent while the default offer for South East Queensland will rise by up to 2.7 per cent.
The biggest drop to the default offer will come in Victoria, where the ESC is proposing a 6.4 per cent decrease.
There are also reductions in the default offer for small business customers: 9.7 per cent for Sydney, Newcastle and the Hunter; 4.4 per cent for Western Sydney and the South Coast; 0.3 per cent for South-East Queensland; 8.2 per cent for South Australia; and 7 per cent for Victoria.
It will, however, increase by 0.7 per cent for the remainder of regional NSW.
Energy Minister Chris Bowen welcomed the news of lower power costs for many, although acknowledged power bills will continue to play a part in the cost of living challenges facing many Australians.
“This is encouraging news,” he said.
“Encouraging for those small businesses and families who will receive lower energy bills as a result.
“But nobody should suggest that there aren’t real cost of living pressures around the world and in Australia, and energy prices are of course part of that and will continue to be.”
While not all households are on the default offer – the AER, for example, says just shy of 500,000 customers across NSW, South-East Queensland and South Australia, or 8.6 per cent, are on the standing offer – Bowen said the decisions by the regulators will affect those who aren’t on the offer too.
“This either impacts directly or indirectly your energy bill,” he said.
“Directly for those on the default market offer. For those who aren’t on the direct market offer, indirectly – the energy companies have to benchmark themselves against this, tell their consumers how they compare to this, and it provides very real pressure on them to match it.
“If they don’t, consumers will know about it and will make choices accordingly.
“It’s partly about those on the default market offer, but it actually impacts on all our bills indirectly.”
The AER said the cost of living pressures facing so many people contributed to its draft decision.
“We know that economic conditions have put pressure on many Australians and the increases in electricity prices over the last two years has made energy less affordable for many households,” AER chair Clare Savage said.
“In light of this, the AER has, in this decision, placed increased weight on protecting consumers.
“While wholesale markets have stabilised since their extreme peaks of 2022, this easing has been offset by the pressures we are observing in network prices.
“Poles and wires costs are a large component of retail prices, comprising around 40 per cent of the price.”
Neither draft decision is final, with both the AER and ESC to receive consultation and feedback from stakeholders before confirming their default market offers in May.
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