Hundreds of thousands of households face higher power bills as the energy regulator has proposed lifting benchmark prices by up to 9% in some regions.
The government has conceded power bills are “too high” and urged users to shop around for the best deal in response to the proposed changes.
Caps on what regulators can charge households and businesses in New South Wales, South Australia, south-east Queensland and Victoria are refreshed every year.
The default market offers or DMOs, as they are known, are due to come into effect in July.
The safety net prices differ by region. According to the draft caps issued on Thursday, residential electricity customers from NSW, South Australia and south-east Queensland will get price rises between 2.5% and 8.9% per cent compared with the last financial year.
Inflation-adjusted annual price increases of between $60 and $140 can be anticipated, depending on the area.
Small business customers could see price gains of between 4.2% and 8.2%.
Victorian benchmark prices are set by a separate state-based regulator. There, residential customers can expect a $12 increase – less than 1% – averaged across the five regions.
The state’s Essential Services Commission said some customers may see their annual prices fall by $19 but others face a $68 hike, depending on location.
Small businesses on Victoria’s default offer are heading towards a 3% price increase, or $104, on last year.
The energy minister, Chris Bowen, said that, overall, power bills “remain too high”.
He encouraged households to shop around for the best deals, which are often significantly below the regulated caps.
“While today’s news is mixed, it does show energy retailers are responding to competition – with energy plans that are 25% cheaper than the DMO it’s worth shopping around,” he said.
Bowen said 80% of households were not on the cheapest energy plan they could be, “which is why we’re making it easier for households to find and switch to better plans”.
The Australian Energy Regulator, which sets default prices in the non-Victorian states, said both higher wholesale market and network costs were contributing to the rise.
Average wholesale market spot prices increased across 2024, driven by high demand, coal generator and network outages, and low solar and wind output that caused “high price events” in the relevant states.
“We’ve seen cost pressures across nearly every component of the default market offer,” the AER chair, Clare Savage, said.
The regulator is expected to finalise the offer in May.
The main factors influencing the proposed price change for residential customers in Victoria were higher electricity network costs, which were partially offset by lower wholesale and environmental costs.
Energy bill relief from federal and state governments has been insulating households and businesses from price pain, with speculation the federal government will extend its subsidies in the budget on 25 March.
Energy regulators kept default offers fairly stable last financial year, in a reprieve after sharp increases in the years prior as Russia’s invasion of Ukraine pushed up fossil fuel prices.
The Australian Council of Social Services said renters, people on income support or living with a disability or chronic medical condition were finding it particularly difficult to pay their energy bills.
New research by Acoss, which surveyed more than 1,000 people about their energy bills in December and January, found almost two in three Australians (64%) were struggling to pay their bills, even though most from that group had tried to reduce their energy use.
Acoss called for greater government support to upgrade social housing and provide bill relief.