The volatile Australian electricity market is showing no signs of calming down in 2022. Following the announcement in May of double-digit price increases for NSW and QLD customers, several smaller retailers have been forced to pass on the costs to customers and take the unprecedented action of advising customers to switch providers.
Read about the NSW and QLD price increases here:
- 2022 NSW Power Price Increase: What does it mean for you
- 2022 QLD Power Price Increase: Everything you need to know
If you’ve noticed a recent increase in your electricity bill or have received notice of a price hike from your supplier, you need to take action now to protect yourself from extremely high bills in the future.
Call CheapBills on 1300 786 045 today to beat the price rise and lock in a fixed-rate contract, before prices go up on 1st July.
- Background: What happened to electricity prices in Australia?
- What will happen to my electricity retailer?
- How can I avoid the increased rates?
What happened to electricity prices in Australia?
2022 has been a challenging year for the electricity industry. In the first quarter leading to March, wholesale prices more than doubled, leading retailers little choice but to pass on the increased cost to consumers.
One of the main causes of this increase has been disruptions to transport caused by COVID-19, resulting in higher fuel and coal prices. More recently, the sanctions placed on Russian coal following the invasion of Ukraine have increased the global cost of coal as countries scrambled to find alternative sources. In Australia, these issues have been perpetuated by bushfires, floods and severe outages in coal-fired power stations, leaving them generating only around two-thirds of their full capacity.
All of this means that when the Australian Energy Regulator (AER) announced the 2022/2023 Default Market Offer (DMO) price on 25th May, there was a significant increase in the price cap.
Following the announcement, which was delayed from the usual date of May 1st due to the unusual volatility of the market, prices are set to rise by up to 12.6% in South-East Queensland and 18% in NSW on July 1st.
What will happen to my electricity retailer?
The impact of the wholesale electricity price increase will be felt differently by different retailers. For larger energy retailers, the impact will be less, because they tend to use hedging strategies to buy 12 to 24 months of electricity per customer at a set price. This means they won’t feel the immediate hit of the price hike in the energy market or need to pass it on in full to their customers.
In addition, the ‘Big Three’ Australian retailers, Origin, AGL and EnergyAustralia, also control electricity generation, and so can remain profitable through the increased price of wholesale electricity.
Unfortunately, it’s a very different picture for smaller retailers, who have limited hedging strategies. These retailers buy electricity mostly from the spot market, where they pay the current electricity price of the wholesale market. This means the impact of a price rise is immediate, leaving the retailer out of pocket in the short term, and potentially unprofitable in the long term.
Electricity retailers have a legal obligation to provide their customers with power under the terms of their contracts. In the face of soaring wholesale electricity prices, some retailers have been left with no choice but to either drastically raise their rates, or encourage customers to switch to another retailer.
In recent weeks, several retailers have been forced to take this extraordinary measure. Customers have received notices warning them that they are facing a doubling in energy prices in the coming days and are encouraged to switch to another supplier to avoid these astronomical costs.
This has affected tens of thousands of customers to date, including 70,000 ReAmped Energy customers. Speaking to The Guardian, their Chief Executive Luke Blincoe said “The markets are just rocketing every day. The best thing we can do is advise customers to look somewhere else because the price increases that we will need to put through are so significant that we just would rather they were elsewhere and getting better deals.”
In Australia, the winter months typically increase the demand for electricity from the grid, so the problem is likely to spread as wholesale prices continue to rise.
If you have received a notice from your retailer, or if you are a customer of a small electricity retailer who is liely to be affected, you should take action now to protect your electricity bill.
How can I avoid the increased rates?
If you’re worried about the future of your retailer and your bill, don’t despair! We can help you find a cheaper, risk-free energy plan, so you can enjoy improved peace of mind and more savings.
Following the AER’s announcement of the DMO price increase, rates are set to go up on July 1st, so you need to act quickly to avoid being left with no choice but to pay the new, higher prices.
In the current, unpredictable electricity market, we recommended moving to a fixed-rate plan. The ongoing global and national issues affecting the cost of electricity are set to continue, but with a fixed-rate plan, the price you pay will not change for the duration of your contract, even if (and when) the cost of electricity skyrockets.
Contact CheapBills online or by calling 1300 786 045 and we can help you find a fixed-rate plan that will give you great rates for your home or business.
But don’t forget – you need to lock in your rate before the prices go up, so contact us TODAY, before it’s too late!
Our team of experts will recommend a fixed-rate plan from our panel of providers that will match your unique energy needs. As well as enjoying 12 months of worry-free electricity prices, we can find you additional benefits such as a high solar feed-in tariff, sign-up bonuses when you switch with us and carbon-neutral or renewable plans.
You could also be eligible for an energy concession under your State government’s affordable energy scheme. Visit one of the links below to find out your entitlements:
With a significant price increase on the cards for all Australians on 1st July and many smaller electricity retailers on the brink of collapse, it is important that as a customer you take control! For both residential customers and small business customers, it could lead to a saving of hundreds of dollars and with the ever-increasing cost of living pressures, that could make all the difference.
If you are with a small retailer, you are at risk of your power bill doubling or your retailer collapsing. If you haven’t made the switch before July 1st, you may be forced onto a more expensive plan with a new retailer.
Our team is waiting to help. Call us on 1300 786 045, or enter your details online here to compare and save.
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