Power hike to add to bills pain

VICTORIANS reeling from the rising cost of living will soon be smashed by power bill hikes worth about $60 a year.

The Essential Services Commission has approved an average 5 per cent price hike in default “no frills” electricity deals from July 1, due to soaring wholesale energy costs.

The ESC says households on those regulated deals would see bills rise an average of about $61, while small businesses will cop an average hike of $270.

The consumer pain follows hikes to petrol and food, which are causing stress across many households and dominated the federal election campaign.

Energy analysts warn unprecedented wholesale electricity price increases fuelled by war, floods and outages could see competitive energy deals most Victorians have – which are lower than default deals – spike by even more than $61.

Energy systems research fellow at the University of Melbourne Dylan McConnell said if the gap narrowed significantly then some Victorians may shift on to regulated tariffs.

“You would expect the gap to probably reduce given what’s going on, but we don’t know that until (companies) start to reprice,” Dr McConnell said.

Warnings have also been issued about small retailers, which rely on offering cheaper deals and have greater exposure to wholesale price fluctuations, being under pressure to survive.

Grattan Institute energy program director Tony Wood said wholesale costs – which account for about a quarter of a total household bill – had more than doubled, so a 5 per cent hike in bills would be difficult for some companies to manage.

“This is unprecedented, what we are seeing with increases in wholesale,” Mr Wood said. “Indications are it may not be (the last hike).”