Hundreds of thousands of Australian households and businesses are set to see major savings on their energy bills, with one state seeing the biggest drop.
The Australian Energy Regulator on Tuesday released its draft Default Market Offer, known as DMO 6, for energy prices in 2024/25.
The offer, which applies to consumers in NSW, South Australia and parts of Queensland, is a price cap on how much retailers can charge customers on their default plans.
Regulator chair Clare Savage said the decision followed a reduction in wholesale electricity prices, partially offset by a rise in network costs.
“Australian households are experiencing difficult times, it’s difficult economic circumstances and cost of living pressures and we have seen two years in increases in prices,” she said.
“We have ensured there’s sufficient cost there, record reflection of the costs and margin for retailers, which makes sure they can continue to operate and compete in the system.”
The draft Victorian Default Offer was also released on Tuesday proposes falls of about $112 (6.4 per cent) in residential bills and $266 (or seven per cent) for small businesses from July 1, if finalised.
About 360,000 homes and 58,000 small businesses are on the Victorian offer.
Essential Services Commission chair Kate Symons said upcoming reductions to wholesale electricity have driven the price drops.
“The draft is a safeguard for Victorian consumers and acts as a reference point so consumers can easily compare different deals,” Ms Symons said.
“Retailers must also provide practical help like advising of their best electricity offer.”
Ms Symons said there was a chance further savings could take place for Victorians by the time the final offer lands in May.
“If we continue to see a downward trend in wholesale electricity if the 12-month average of the wholesale electricity cost, that will flow through to the final update,” she said.
For NSW, SA and Queensland customers, it is estimated price increases will be less than the rate of inflation.
Nine per cent of households and up to 20 per cent of small businesses will be directly impacted by the offer price, which is a “reference price” for market competitors.
“It’s the price against which retailers have to advertise their plans and offers and discounts,” Ms Savage said.
“From that perspective, it tends to have a fairly significant impact on the market.”
A majority of residential customers could see price reductions of between 0.4 per cent to 7.1 per cent.
Queensland bill payers in the state’s southeast will experience the biggest hike at 2.7 per cent but the regulator added it already has some of the cheapest prices nationally.
Most small business customers could see reductions up to 9.7 per cent while others could face modest increases of around 0.7 per cent, depending on their region.
Ms Savage said bill payers should shop around and some deals are as low as 18 per cent to 23 per cent below the market offer.
Federal Energy Minister Chris Bowen said the draft default market offer, or benchmark price, was proof that government policies to cap coal and gas, and more renewable energy going into the system, are working.
“And it shows the impact of my request – along with state ministers – to the Australian Energy Regulator to prioritise the needs of consumers and put consumers first … rather than competition,” he told reporters in Canberra.
The Australian Energy Regulator also said wholesale electricity prices had stabilised since the extreme peaks seen in 2022.
Ms Savage also pointed to reductions in the prices of retailers’ more competitive market offers, which are below the default offer.
Energy retailers are required to tell customers on the front page of their bills, at least every 100 days, if they can offer a better deal.
The energy regulator’s final offer determination will be delivered in May and will come into effect from July.
This post was originally published on Michael West.
