Energy bills could rise by nearly 10% on the east coast over the coming year.
The Australian Energy Regulator (AER) has handed down its final decision on the maximum power price hikes that can be passed on to households and businesses.
In response, both the Government and Opposition underlined concerns about rising cost of living pressures.
The Government previously announced it will discount every household’s power bills by a total of $150 from July until the end of the year.
DMO
To protect the public from excessive price hikes, the AER sets a “default market offer” (DMO).
Think of it as a ceiling for energy companies — they can’t charge more than the DMO on a standard account.
It applies to NSW, South East Queensland, and South Australia, and is valid for one financial year (1 July – 30 June).
Power companies in the rest of the country use the DMO as a guide for what they should charge.
Decision
The regulator handed down its official decision on the DMO yesterday.
The figures vary based on location, which are set to be larger in NSW compared to SE Qld and SA.
The average NSW household’s electricity bills will increase by around $190 over the financial year.
SE Queensland’s average increase will be $17 and SA’s will be $38.
Increases
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AER
AER Chair Clare Savage acknowledged “this is not welcome news for consumers”.
In its report, the AER said its DMO is to “ensure consumers pay no more than necessary for a safe and reliable power supply.”
Savage said “sustained pressures” in the electricity grid are to blame for the increases.
Government remarks
Energy Minister Chris Bowen said “it’s clear energy bills for Australians remain too high,” while noting the DMO is slightly lower in some areas compared to the draft decision delivered in March.
Bowen pointed the extension of an energy bill discount, which will reduce bills for all households and one million small businesses by $150 over the second half of the year.
The pre-election budget announcement, backed by the Coalition, will see $75 automatically deducted from the next two quarterly power bills.
Opposition
Deputy Opposition Leader Ted O’Brien said: “These steady increases in power prices are not sustainable for families, businesses and industry.”
In the run-up to election day, the Coalition proposed building seven nuclear reactors around Australia. Labor defeated the Coalition, and increased its majority.
As part of his response to the DMO, O’Brien noted the Coalition “did not meet expectations” in the election. The Liberal Party has vowed to review all its election policies.
