Three-quarters of Australians say they’ve been shocked by the price of their energy bills over the past three months, according to new research from Compare the Market.* It comes as the Australian Energy Regulator (AER) has released its draft decision for the default offer that will apply in South East Queensland, New South Wales and South Australia on Thursday 13 March, projecting price increases across all regions.
A draft decision from the Essential Services Commission (ESC), which sets default pricing in Victoria, has also been released, with increases in some parts of the state, but decreases in others.
Under the AER proposal, the AER recommends that the average annual household electricity bill for residential customers without a controlled load on the Default Market Offer (DMO) increase by a year-on-year average of:
- $159 (8.8%) to $1,969 in NSW Ausgrid distribution network (Sydney/Newcastle/Hunter Valley region)
- $ 174 (7.8%) to $ 2,397 in NSW Endeavour distribution network (Wollongong/Lithgow down to Ulladulla)
- $200 (8%) to $ 2,713 in NSW Essential distribution network (rest of NSW)
- $119 (5.8%) to $2185 in QLD’s Energex distribution network (SE QLD)
- $114 (5.1%) to $2,344 in South Australia’s SA Power Networks distribution network (South Australia)
The ESC in Victoria is projecting that annual prices would drop by $19 in some Victorian distribution zones but increase by up to $68 in others, compared to 2024–25. A 3% average increase is tipped for business customers, but varies between distribution zones.
Of the 43.2% of Australians who said they received a shock bill over the past three months in Compare the Market’s research, 75.2% said their electricity or gas bill shocked them the most. It was ahead of other major bills including water bills (30.7%), the cost of fuel (27.3%), phone bills (15.1%), internet bills (13.3%) and credit card bills or loan repayments (11.7%).
What’s more is that one in five Australians (20.8%) surveyed said their energy bill was likely to take their bank account into overdraft or blow out their credit card.
Compare the Market’s Head of Energy, Meredith O’Brien, said many Australians may have become complacent when it comes to their energy bills, but now’s the time to ensure you’re on a good deal, ahead of any potential pricing increases in 2025.
“We know that all Australian households received rebates to help keep energy bills down – some states more than others – but the reality is most homes have either chewed through the rebate or will only receive one or two more payments of $75 until the end of the financial year,” Ms O’Brien said. “In Brisbane, for example, where residents received a $1,000 cost-of-living rebate as well as the $300 Federal Government rebate, the latest CPI data shows that electricity prices were up 219.8% in the December quarter.
“If you’re in a part of Australia where you can compare and switch energy plans and you haven’t in more than a year, chances are you’re paying more than you need to for the same gas or electricity supply.
“An easy way to know if you’re paying too much is to search for the ‘better offer’ message on your latest bill. Retailers must display a ‘better offer’ message on your bill at least once every quarter in New South Wales, South East Queensland and South Australia, and at least once every 100 days in Victoria, letting you know whether they have a cheaper plan available. But also ensure you’re comparing against other plans and retailers on the market, as there are some great deals available right now.”
Ms O’Brien stressed that draft proposals are subject to change and that we should know the final determinations that will apply from 1 July sometime in May.
While wholesale prices decreased in all regions except South Australia and Queensland in the last quarter, Ms O’Brien said it wasn’t the only factor considered by regulators when setting electricity prices.
“Wholesale prices only account for roughly a third of your energy bill, and regulators consider an array of other factors when determining prices,” Ms O’Brien said. “Firstly, network costs continue to rise for retailers and distributors and it’s costing more for the materials used to maintain the network. Eventually, these costs are passed onto consumers in one way or another.
“People may not realise that there’s also a cost involved in meeting renewable energy targets and transforming the grid.”
Other costs may include:
Distribution costs – the cost of transporting and distributing electricity to homes is on the rise. Remember that distributors are responsible for maintaining gas pipes, electrical poles and wires, as well as vehicle, fuel and employee costs.
Environmental costs – Revamping the grid to be more supportive of renewable energy should eventually bring prices down, but there is a cost involved in supporting these initiatives.
Buying in bulk – If retailers have bought electricity in bulk at a fixed rate and prices drop, it could mean Australian households need to wait some time to see the benefits of the price reduction.
Retailer costs – At the end of the day, your energy retailer is still a business and there are costs involved in day-to-day operations, installing and updating meters, ensuring there’s money for customers who fall on hard times.
Metering costs – You’ve likely heard of more smart meters being rolled out across the country by 2030, which typically allow electricity to be read remotely and to track data differently from the traditional meters. There’s a cost involved in this new technology, which again, could be passed on to consumers.
Ms O’Brien’s top tips for looking for a better energy deal
- Always cross your ‘t’s and dot your ‘i’s, as plans available, even those with the same retailer, can have different prices. If discounts are available, you may need to meet conditions to receive benefits or maximise the savings available,
- Supply charges catch some people out and this charge may be very high compared to other retailers offering similar usage rates. Factor both the usage and supply costs when comparing and look out for multiple supply charges if you have separate meters, such as a solar metering supply charge, or controlled load supply charge.
- Not all tariffs are the same, so be aware of the tariffs that apply to your home. For example, time-of-use tariffs charge you different rates depending on the time of day or night, while single-use tariffs are one price – no matter what time of the day you’re using energy. You may also be subject to demand tariffs, where you’re charged an additional fee for energy you consume when there’s high demand on the electricity grid. This additional charge is likely to be applied when you are upgrading to a smart meter.
- The amount you’re credited for the solar electricity you export back to the grid, also known as the feed-in tariff, varies between retailers. In Victoria, new minimum solar feed-in tariffs are effective on 1 July each year. Check the difference between the solar credit you may receive and your usage from the grid. Also be aware that with the sun tax on the horizon, solar feed-in tariffs are decreasing. The sun tax, also known as two-way pricing, can mean you are charged for exporting solar during the day (off-peak), but a higher feed-in tariff at peak times, such as evenings.
- Compare your options if it’s been more than a year since you’ve switched retailers or plans. While your contract is usually ongoing, the discounts you were once entitled to may cease or you may be required to pay full rates. Your rates may also go up or they may not be as competitive as others on the market.
*Survey of 1,010 Australian adults, conducted December 2024.
For more information, please contact:
Phillip Portman | 0437 384 471 | Phillip.portman@comparethemarket.com.au
Compare the Market is a comparison service that takes the hard work out of shopping around. We make it Simples for Australians to quickly and easily compare and buy insurance, energy, and home loans products from a range of providers. Our easy-to-use comparison tool helps you look for a range of products that may suit your needs and benefit your back pocket.
