Power price set to soar

Forecast of hefty rise

HOUSEHOLDS will be slugged with electricity prices as much as 30 per cent higher in coming months.

The Australian Energy Regulator released its draft default offer – the cap on the maximum price retailers can charge customers in NSW, South Australia and South East Queensland – on Wednesday morning.

It foreshadowed increases of between 19.5 per cent and 23.7 per cent, depending on the state and provider. Small business customers can expect price rises of between 14.7 per cent and 25.4 per cent.

About 600,000 people are on the default offer in SA, NSW and South East Queensland.

AER chair Clare Savage said that while the increases were “significant”, prices could have risen as high as 50 per cent had the government not intervened.

“At that time, the estimates ranged between 35 per cent and 50 per cent,” she said.

“That was alarming, a 40 per cent to 50 per cent price increase is horrific. So it’s good to see that all governments have intervened in both coal and gas markets and that has brought down the price expectations in the decision.”

Ms Savage urged customers to shop around as there were retailers offering prices below the default market offer.

Victoria, which operates a separate electricity price cap, also released its draft offer on Wednesday.

The Essential Services Commission proposed increases of 30 per cent for households and 31 per cent for small businesses from July 1.

About 400,000 Victorian households and 55,000 small businesses are on the default offer.

The ESC said a typical household bill would rise from $1403 to $1829 a year, while small businesses could expect an increase from $5620 to about $7358.

Federal Energy Minister Chris Bowen acknowledged the skyrocketing costs would hit hip pockets but said it could have been worse.

“We know this is difficult news for customers who are facing cost-of-living pressures. Nobody wants to put up prices at all,” he said. “So, 20 to 22 per cent is still a significant increase, but it is much, much lower than it could have been.”

The Australian Council of Social Service urged the government to provide low-income earners with relief of up to $2000 via an emergency hardship payment in the upcoming budget.

“People on the lowest incomes do not have anything left in their budgets to cut back on and are at breaking point,” chief executive Cassandra Goldie said. “We are worried about what consequences this leaves for people.”

Both the ESC and AER blamed increases in wholesale energy costs for the high prices.

A final default offer will be issued later this year following consultation.