The ACCC’s latest report on its Inquiry into the National Electricity Market provides unique insights into the electricity bills faced by customers across New South Wales, South Australia, South East Queensland, and Victoria. The ACCC’s findings demonstrate how different energy plans, tariffs and contracts can impact consumers’ bills.
The report found electricity prices have increased for most residential and small business customers over the past year, though the full impact of higher wholesale costs experienced in 2022 will continue flowing through to bills over time. According to the ACCC, “Changes in retailers’ costs take time to flow through to retail prices and, even more belatedly, actual billing outcomes experienced by consumers.”
Higher wholesale costs are the main driver of price increases. The ACCC noted “wholesale electricity costs are an important driver of retail electricity prices contributing, on average, 28% to the total average cost per residential consumer in 2021–22.” While spot and contract prices in wholesale markets have eased recently, “they remain relatively high by historical standards.”
The report provides evidence that standing offers remain pricier for most customers compared to competitive market offers. However, the ACCC warned, “Over the last year, we have observed more market offers for existing and new customers priced above standing offers. Customers should regularly review their energy plan against other offers available in the market.”
According to analysis of billing data, median residential bills on standing offers were around 6–7% higher in the third quarter of 2022 compared to a year earlier. By comparison, median residential bills on market offers were largely unchanged over the same period. The ACCC estimated residential standing offer customers in South Australia, New South Wales and Victoria could have saved between $118 to $176 per year in the third quarter of 2022 by switching to a lower-cost market offer.
For customers facing payment difficulties, the report shows hardship and payment plan customers had significantly higher median bills and usage compared to other customers. The ACCC noted “the higher median usage and therefore higher median bills faced by hardship and payment plan customers may contribute to the development of enduring payment difficulties for customers already struggling to pay for their electricity.” However, the ACCC also acknowledged the limitations in its data regarding individual customer circumstances and consumption needs.
Although electricity bills are increasing for most, the ACCC’s customer billing data provides evidence that installing solar, choosing cost-reflective tariffs, and regularly reviewing and switching energy plans can help reduce costs. According to the ACCC, “customers with solar panels have lower electricity bills by reducing their grid electricity consumption and exporting excess electricity to the grid in exchange for solar feed-in tariff credits.” The report also notes that cost-reflective tariffs “can lead to better effective price outcomes for consumers when they are able to use electricity outside of peak periods.”
To summarise in the words of the ACCC, “While increases in electricity wholesale costs will continue putting upward pressure on bills, consumers can still reduce their electricity bills by making sure they are on the best energy plan for them.” By using free government comparison sites, checking eligibility for rebates, and contacting their retailer, customers may be able to find a more affordable option.