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Many Bill Hero subscribers have received price change notices from their retailers over the past week or two and, understandably, are keen to get ahead of the July 1 price changes by switching to the best-priced plan available.
Here's our summary of what's happening and why you should wait before making any switch decision.
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Our advice, for now, is to sit tight and wait until the end of the first week in July for the price changes to settle. We'll help you find the best-priced plan when the new pricing landscape is clear.
Why do prices change in July?
Retail prices change across the NEM from July 1 every year, triggered by the annual regulated price change event for the electricity distributors, which update their rates for network usage on 1 July every year.
Retailers are free to change their market offers anytime, but they all converge at this time of year — not because they're obliged to change their pricing simultaneously in July, but because they are obliged to pay the network operators the new rates for the carriage of the electrons their customers consume. They use this network price change as a trigger to review and reset their own retail prices.
The motivation for this is pretty obvious. Retailers bundle up all the underlying price elements for electricity supply — connection charges, consumption charges, and environmental scheme charges — into a single bill price, so when the cost of one of those underlying elements changes, they will update their own retail pricing to ensure the underlying change is accommodated.
Many retailers have leapt out of the gates early, issuing price change notices well before July 1. Our experience from previous years is that additional knock-on price changes continue to occur after July 1 as the retailers adjust their pricing in response to competitor plans and prices as they become visible.
How to respond?
Every retailer will update their plans between now and week 1 of July, and we're already seeing daily changes to the prices and plans in the market, and some retailers are already issuing their price change notices.
It's a tricky time to decide about switching, because a plan that looks good today may well announce new pricing tomorrow, making it much less attractive. So our advice is to wait until the dust settles.
Our advice to energy consumers is to sit tight until the end of the first week in July before making a switch decision.
It's always hard to do nothing when you receive a price change notice warning of a major price uplift. Unfortunately, those price uplifts will impact every plan from every retailer, so there's little benefit in switching early before the pricing landscape is clearly visible.
Better to wait until all the price changes are complete, then move to the best available plan.
As always, Bill Hero will help you find that best-priced plan once the dust has settled across the market. Things will become much clearer after the first week of July.
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