Residential electricity is to go up by 9.7 per cent (including inflation) in Broken Hill.
The rise in electricity from July 1st has been grossly sensationalised by major media outlets reporting the highest possible rate.
Another electricity distributor called Endeavour, which doesn’t supply the Far West, is raising its residential flat rate by 18.3 per cent
The Australian Energy Regulator (AER) sets a limit on the amount the supplier can raise the cost of electricity each year.
This is called the Default Market Offer (DMO) which caps the amount distributors can charge.
This year it is capped between 1.7 per cent and 8.2 per cent above inflation so adding inflation, presently at 5.1 per cent, makes it 6.8 to 13.3 per cent.
The average usage is 2919 for a one person dwelling and 5047 for a two person dwelling based on the closest similar environment.
HOW IS THE DEFAULT MARKET OFFER SET?
Ms Clare Savage, Chair of the Australian Energy Regulator explained the considerations in setting the DMO.
“In setting these new DMO prices, we understand the significant impact they will have on some consumers who may already be struggling with the cost of living pressures,” Ms Savage said.
“We have given scrutiny to all factors affecting the DMO calculation and have set safety-net prices that reflect the current conditions and underlying costs to retailers.
“Setting the DMO is not about setting the lowest price.
We are required to set a price that will 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.
If many retailers are unable to recover their costs and are forced to exit the market – as we have seen recently in the United Kingdom – that will add more cost to consumers,” she said
WHAT’S FUELLING THE RISE?
The cost of electricity has been affected by reductions in thermal generation (coal power stations) resulting from unplanned outages and higher coal and gas prices, slowing of investment in new capacity, and increasingly
‘peaky’ demand (sharp highs and lows) driving up the cost of wholesale electricity contracts for retailers.
This situation has been made worse by the ongoing war in Ukraine, which has led to significant pressure on coal and gas prices globally as well as extreme weather in NSW and Queensland which has affected coal supplies and electricity demand.
Ms Savage said with cost-of-living pressures increasing, it is especially important that customers engage with their retailers to ensure they are on the best energy plan for their individual circumstances.
The AER’s dedicated price comparison website, Energy Made Easy, is designed to make it easier for consumers to take control of their power bills.
By entering a few basic details or uploading their bill, the site allows customers to see what other retailers are offering and find the best plan for them.
“Residential customers can currently save around $443 or 24 per cent off their bill and small businesses can save around $1,308 or 29 per cent by switching,” Ms Savage said.
She urged any consumers in financial difficulty to reach out for support through payment plans and hardship programs that retailers must provide, and the AER enforces, under national energy retail rules.