A long overdue reset to the tariff reform agenda promises better outcomes for energy consumers. Plus a new report finds that retailers really do charge residential customers more than business.
2023 has been an 'annus horribilus' for retail energy consumers. Wholesale rates are finally down, so in principle, retail rates should follow. But when? Bill Hero will help you get the best of those rate reductions as quickly as possible.
Another year is drawing to a close, and at Bill Hero, we're reflecting on just how crazy the Australian retail energy market has been over the past year or so.
The Russian invasion of Ukraine in 2022 sparked a dramatic spike in wholesale electricity prices. This wholesale price shock delivered an immediate retail energy price rise, quickly becoming the epicentre of a more generalised cost of living crisis for Australian households.
Since then, the wholesale spot prices have moderated, and are now substantially lower than what they were at the peak of the wholesale energy crisis in Q3 of 2022.
Average Q3 electricity spot prices in NEM by year: Source: AER analysis using NEM data.
Sadly for energy consumers, the reduction in wholesale spot rates, although substantial, has not translated into a reduction in retail energy bills. Hmmm 🤔.
Many energy consumers are asking why that would be the case?
Retail prices will decline over time, eventually, but retailers will pass through those savings at different speeds, depending on their hedging arrangements—some have pre-paid inflated legacy prices for energy still being sold today—and depending on their internal financial calculus on how long they can profitably hang on before being forced to pass-through the wholesale price savings they're already enjoying.
Rule #1 of energy retailing is that the retailers rely on consumer inertia to maximise their profitability.
Whatever the reason for the slow pass-through of savings, the onus remains squarely on you as an energy consumer to remain vigilant and keep checking the market for the better-priced plans that will steadily emerge over time.
This is tedious, annoying, frustrating and time-consuming work, and to really stay on top of things, you need to do this constantly, which, of course, is exactly what Bill Hero does for you.
If you're not already a subscriber, then now is the time.
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Wholesale electricity prices have come down significantly, but don't expect your retail energy bill to come down on its own any time soon. It's more important than ever to shop around to find a better deal.
The AER's annual Retail Market Report indicates that although the smaller (and generally cheaper) tier-two and tier-three retailers are winning market share away from the 'big three' tier-one competitors (Origin, AGL, and Energy Australia), there has been a dramatic increase in energy consumers on hardship plans.
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A long overdue reset to the tariff reform agenda promises better outcomes for energy consumers. Plus a new report finds that retailers really do charge residential customers more than business.
The ACTU Price Gouging Inquiry holds a blowtorch to the energy industry, highlighting the predatory pricing tactics used across the industry and how it is impacting the Cost of Living in Australia.
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energy reporter Daniel Mercer
Richard Foxworthy
