According to the Australian Competition and Consumer Commission (ACCC), recent increases in electricity prices have ranged from 10% to 20% above the current regulated safety net.
For context, the electricity price safety net was established to limit how much companies can charge customers on standing offer contracts. Around 10% of residential customers are currently on such contracts, compared to 90% who are on market offers and will be affected by the increases.
According to the ACCC, energy companies have sent letters to their customers advising them of price increases above the safety net. Here are some of the information mentioned in the letters received by consumers in New South Wales, Victoria, South East Queensland, and South Australia:
- These new rates are 21% above the Default Market Offer (DMO) reference price, however, can be 4% above the DMO reference price if you pay on time.
- This Energy Plan is 19% more than the reference price.
- Due to the variation in our rates from 1 July 2023, your plan will be 9% greater than the reference price.
While households have the right to receive a standing offer contract, energy companies are not actually required to move customers onto standing offer contracts when they increase the price of an existing market offer contract higher than the safety net.
ACCC Commissioner Anna Brakey said Australians could potentially be overpaying for electricity due to their recent rate hikes surpassing the safety net incorporated within standard offer contracts.
“You don’t necessarily need to change energy company to get a better deal: the simplest thing you can do is to contact your existing company and ask how your current plan compares to the regulated standing offer,” Ms Brakey said.
A typical household subscribed to a market plan that currently stands 21% above the reference price has the potential to save approximately $400 annually by transitioning to the regulated standing offer, assuming average consumption.
For the same household, opting for a market offer that sits 10% below the reference price could lead to savings of around $600 per year, assuming average consumption.
ACCC analysis shows that around 90% of currently advertised market offers are below the reference price.
Furthermore, notable price discrepancies exist among market offers that fall below the reference price, with certain smaller retailers providing substantial discounts.
“Moving to a cheaper plan through your existing energy company is the easiest way to save money right now, but there can be greater savings available for those who are willing to switch,” Ms Brakey said.
“We strongly encourage households and small businesses to use the Government comparison sites Energy Made Easy and Victorian Energy Compare to find a better offer.”
Photo by @padrinan on Canva.