Electricity bills for hundreds of thousands of Australian households will rise by $100 or more a year as consumers begin to feel the pinch from soaring fossil fuel prices pushing up the cost of power generation across the energy network.<\/p>\n
Intensifying cost-of-living pressures while inflation remains at a two-decade high, a decision by the Australian Energy Regulator on Thursday is the first indication that sharp increases in wholesale electricity prices are set to drive double-digit jumps in bills for households and small businesses across the country within weeks.<\/p>\n
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Power bills are rising again after spikes in the coal price caused wholesale energy generation costs to spike. <\/span>Credit:<\/span>IStock<\/cite><\/p>\n The so-called \u201cdefault market offers\u201d \u2013 the price caps on what retailers can charge households and businesses that don\u2019t take up special deals or bundle utilities bills \u2013 would rise in all states across the east-coast electricity grid, the regulator said. From July 1, default offers will jump by 14 per cent, or $227, in New South Wales; 11 per cent, or $165, in Queensland; and 7 per cent, or $124, in South Australia.<\/p>\n In Victoria, where the state\u2019s Essential Services Commission determines its own default offer, the price cap for households rose by 5 per cent, or $61, a year.<\/p>\n \u201cIn setting these new default market offer prices, we understand the significant impact they will have on some consumers who may already be struggling with cost-of-living pressures,\u201d Australian Energy Regulator chair Clare Savage said.<\/p>\n \u201cWe have given scrutiny to all factors affecting the default market offer calculation and have set safety-net prices that reflect the current conditions and underlying costs to retailers.\u201d<\/p>\n Prices for cargoes of thermal coal at the Port of Newcastle have more than tripled from $100 a tonne to $350 a tonne in the past 12 months<\/span>Credit:<\/span>Nic Walker<\/cite><\/p>\n About 800,000 households in Victoria, NSW, Queensland and South Australia are on default offers, and more than 160,000 small businesses, while more than 90 per cent of customers across the country are on market contracts rather than default offers.<\/p>\n The NSW and Queensland default-offer price rises are being driven largely by spiking wholesale costs because of higher coal and gas prices adding to the cost of fuelling the states\u2019 biggest power stations. Coal and natural gas prices have been rising sharply around the world as global energy crunch is being exacerbated by energy utilities shunning Russian supplies and scrambling for alternatives in a bid to starve Moscow of the revenue it needs to fund the war. Prices for cargoes of thermal coal at the Port of Newcastle have more than tripled from $100 a tonne to $350 a tonne in the past 12 months, as global demand ramps up.<\/p>\n The Australian Energy Regulator on Thursday said default market offers were governed by laws designed not to set the cheapest price possible, but rather, establish a rate of pay for customers that was as low as possible while enabling retailers to remain economically viable.<\/p>\n Savage said the price must allow retailers to recover their costs, earn a reasonable margin and support retailers to compete and offer better deals and products in a competitive retail environment, Savage said.<\/p>\n \u201cIf a large number of retailers are unable to recover their costs and are forced to exit the market \u2013 as we have seen recently in the United Kingdom \u2013 that will add more cost to consumers,\u201d she said.<\/p>\n The Australian Energy Regulator usually sets the maximum price retailers can charge households and small businesses on May 1. However, the federal government in April delayed that process, known as the \u201cdefault market offer\u201d until May 25, after the federal election, to give more time to get accurate data on recent price fluctuations.<\/p>\n<\/p>\n