Why your power bill may rise despite the lower default market offer

Why your power bill may rise despite the lower default market offer Wed 24 Jun 2026 at 5:06am In short: Electricity retailers have issued notices of rate increases to customers, despite the default offer falling in many markets. A comparison service says some retailers appear to be raising their cheapest prices to claw back profit. What's next? The Australian Energy Council, which represents power retailers, says far more customers are likely to see decreases, rather than rises, to their bills this year. Like millions of Australians, Russell Smith took heart last month when he heard the news that benchmark electricity prices would be falling. The Australian Energy Regulator (AER) had just announced that after years of increases, so-called default market offers would be decreasing in many areas, including south-east Queensland. It was good news for the retired army intelligence officer, who had bought solar panels, a battery and an electric vehicle for his place in Maroochydore, 130 kilometres north of Brisbane. "We're now trying to live as much as we can off grid, but you obviously still have to be connected to the grid," Mr Smith said. But last week Mr Smith received an email from his retailer saying that his charges would be going up from the beginning of next month. Usage charges would be higher across the day — albeit to a minor degree — but it was a different matter for the fixed component of his bill. The daily supply charge, Mr Smith was informed, would be jumping 13 per cent. At the same time, he would be getting even less for his solar exports, the prices for which would fall from 4 cents a unit to 2 cents. In a statement to the ABC, Alinta Energy said the provider aims to provide "competitive, good value offers" across all markets". "We're also transparent about changes, writing to customers in advance with details of their new rates, how they compare to the reference price, and other options available," a spokesperson said. "While we understand price increases are never welcome, this year's changes reflect the cost of serving customers in each market rather than movements in the DMO alone." To Mr Smith's bemusement, a day after the notice of the increased rates he received a newsletter from his local state MP advertising the Queensland government's role in lowering prices. "[Energy companies] have got to run a business, I understand all that," Mr Smith said. "But then for the government to come out and say that they're going to be reducing the price by 10.7 per cent … that's clearly not the case." Default offer a ceiling, not a floor Across big parts of Australia — from Queensland to Victoria and South Australia — thousands of electricity customers have been getting similar notices. In some cases householders are being whacked with hikes to their daily supply charge of more than 60 per cent. The hikes have left many of those consumers angry at what they say is a contradictory and confusing market. But Richard Foxworthy, who runs subscription-based power price comparison service Bill Hero, says there is a method to the apparent madness. He said the default offers set by the Australian Energy Regulator in Queensland, New South Wales and South Australia are supposed to act as a ceiling price. Mr Foxworthy said they were there to protect consumers who were unable or unwilling to engage with the market. But they are also the reference by which most other prices in the market are set, typically at a discount. "Default offer prices tend to get a lot of media attention because it's one of the few easily digestible price signals that happens every year," Mr Foxworthy told The Business. "There's an official announcement and that sets expectation across the industry about what should be happening with retail prices." Most customers on market rates, not default offer Mr Foxworthy explained that a decrease in the benchmark price gives retailers less room to discount their competitive offers. As a result, he said they appeared to be raising their cheapest prices in a bid to claw back some of the lower profits likely to flow their way. Loading...What's more, far more customers are on market offers than default ones, which affect less than 10 per cent of households, according to the AER. "There is quite a wide spread between the highest price in the market, which is the default offer price, and the best available price in the market," Mr Foxworthy said. "The price spread right now is over $1,000 a year between best available price and the worst available price." Amid the noise, Mr Foxworthy can understand why many consumers might find the market inexplicable. "I think it's completely understandable and it speaks to the confusion inherent in the retail energy market," Mr Foxworthy said. "We call it a confusopoly." He said the national electricity market spanning Australia's eastern seaboard was almost incomprehensible to the layperson and that the default price was one of the few "coherent signals" consumers could use to understand it. To that end, last month the AER said default prices would fall up to 10 per cent from July because of declines in the underlying cost of producing power. The regulator noted that pressure on wholesale generation costs were finally easing as the hit from Russia's invasion of Ukraine in 2022 began to fade. Equally, output from Australia's rising share of renewable energy and batteries was also helping to put downward pressure on historically high wholesale costs, the AER noted. Rebalancing between fixed and unit costs on bills Louisa Kinnear from the Australian Energy Council, which represents power retailers, says far more customers are likely to see decreases rather than rises to their bills this year. But many consumers will be affected by a shake-up to the way power bills are typically charged. Under changes approved by the regulator, energy companies will now be able to recover more of their costs via fixed — or daily supply — charges. Offsetting this will be proportionally lower usage charges. "Some customers may think that as a result of that change, that their electricity bill is actually going up," Ms Kinnear told The Business. "In fact it's probably more just a rebalancing of the fixed and unit charges on their bill." The Business contacted several energy retailers after customers reported increased rates. In a statement, Origin Energy said it would deliver "an overall reduction in electricity prices" for the majority of its customers. "Many customers will see increased supply charges and lower usage rates. The majority of these customers, based on an average Origin customer usage profile, will see lower electricity bills," it said. Another retailer, Globird, said the outcome for customers would vary depending on their starting point. "If a customer is already on a lower-priced market offer, their rates may still increase if the underlying cost of supplying that plan has changed,"Globird said. "Once the annual price change season settles, we are confident our rates, when benchmarked against industry peers, will be seen as very fair and competitive." The challenges of comparing prices Ms Kinnear said the over-complexity of power pricing was a problem facing the energy industry and one it needs to tackle. Loading...Last week, the body that makes the rules in the national electricity market called for an overhaul of bills to take away the complexity for consumers. Ms Kinnear said the industry agreed with the argument. "We're very supportive of any measures that are taken, I think, to simplify the process for customers and to make it easier to ensure that customers are on the best deal for them," she said. "We recognise that it can be really challenging to compare electricity prices and ensure that customers are on the best deal." In a statement, the AER said default offers were merely a safety net for consumers and that it was up to retailers to set their own prices. The regulator urged people to shop around, saying they were free to change their energy plan at any time. "Retailers are responsible for determining the structure of energy plans in the competitive market, including how they balance fixed and variable components," a spokeswoman said. In a nod to the concerns that have been raised, however, the regulator said it would monitor energy retailers to see whether they were complying with the energy rules. "We are currently looking at how retailers are both structuring their energy plans and explaining prices to customers." On the Sunshine Coast, Mr Smith is unimpressed by the whole affair. While he understands energy companies have got a commercial imperative, he says the public posturing of politicians and others about falling prices rings hollow. "It seems to me that retailers are taking no notice of their claims," Mr Smith said. "It's more about the principle of the matter. "Governments are making claims that there's going to be a reduction and retailers are clearly not listening to what the government and the regulator are saying." [Image text:] & Transmission Charges Due ce detail Balance ervi Sen.ice Desenpto