The AER’s decision will directly impact customers in South Australia, New South Wales, and South-East Queensland who are on the default market offer (DMO).
The DMO is the maximum price providers give to households and businesses on standing deals who haven’t searched the market for more competitive deals.
The final DMO offer unveiled by the AER on Thursday morning is slightly higher than the 19.5-23.7% forecast from March this year.
The revised increase was based on stakeholder feedback and has factored in updated wholesale, network, environmental schemes, retail costs, the latest inflation forecasts, and reduced the retail allowance in NSW.
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AER Chairwoman Clare Savage said the decision was carefully balanced to help protect consumers and retailers alike.
“We know households and small businesses continue to face cost of living pressures on many fronts, and that’s why it’s important the DMO provides a safety net for those who might not have shopped around for a better power deal,” Ms Savage said.
“In setting the DMO price this year we have sought to protect consumers from unjustifiably high prices and at the same time allow retailers to offer consumers better deals than their standard plans.
“No one wants to see rising prices, and we recognise this is a difficult time, that’s why it’s important for consumers to shop around for a better deal.”
Ms Savage warned that without the energy market intervention, energy prices would have soared by 35-50%.
Here are the increases that apply for each state:
|Without controlled load||With controlled load|
|New South Wales||20.8% to 21.4%||19.6% to 24.9%|
Meanwhile, small business customers are facing increases of 14.7% to 28.9%, depending on their region.
Victoria’s Essential Services Commission (ESC) also released its default offer, with a 25% increase - equivalent to a $352 increase to residential customers.
Higher electricity prices will intensify costs of living pressures on households, adding to the already existing pain of 11 interest rate hikes and soaring inflation.
The increase from 1 July will also add yet more pressure on the Reserve Bank of Australia to increase interest rates over the coming months.