Starting from July 1, 2023, electricity prices will rise by up to 25% in NSW, southeast QLD, SA, and VIC, impacting renters across Australia.

It’s part of the ongoing cost of living crisis causing financial strain for households nationwide.

Let’s break it down in plain English:

  • Initially, the Reserve Bank of Australia (RBA) downplayed the inflation issue, expecting it to pass quickly without requiring interest rate hikes. However, they were mistaken.
  • Since June 2020, wages that have been adjusted for inflation have taken a significant hit, dropping by 8.2% – the largest decline in at least 24 years.
  • Moreover, electricity bills are about to soar, with the Australian Energy Regulator (AER) confirming price increases ranging from 19.6% to 23.9% in NSW, SA, and southeast Queensland.
  • Victoria’s Essential Services Commission also announced an average increase of 25.1%, with some energy providers raising rates by as much as 27.2%.

The increase in electricity costs is adding more strain to the RBA, which is causing inflation to rise.

Household fuel prices, including gas, have gone up by 26.2% in the past year.

Most Australians will experience a 20-25% increase in their electricity prices, which will likely cause the electricity component of the Consumer Price Index (CPI) to increase even more.

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While the government’s energy subsidy will provide temporary relief, the actual impact will be felt once the subsidy is no longer included in the CPI calculation. This could cause another surge in the electricity CPI component.

So, what should I do to avoid the worst of the electricity price hikes?

To avoid the worst of the electricity price hikes, it’s recommended to compare energy plans with other retailers to see if you can find a better deal. This is especially important if your current provider has notified you of upcoming price increases.

Consider the following factors when comparing plans:

  • Usage rates and supply charges
  • The difference between your estimated annual cost and the reference price or Victorian Default Offer (VDO)
  • Look for sign-up discounts or bill credits
  • Be aware of additional charges like move-in costs, credit card fees, and disconnection fees. These charges can vary among providers.

Take the time to review your options and choose the plan that best suits your needs and budget. 

How will rising electricity prices impact my state?

If you haven’t switched or negotiated a new plan in over 12 months, you’re probably on a standing offer plan.

Unfortunately, these plans are less attractive and can cost you hundreds of dollars extra on your power bill. In contrast, market offers usually come with discounts and are better value. Here’s a breakdown of the price increase for each state that falls under the National Electricity Market (NEM):

  • NSW: Prices will go up by 19.6%-24.9%, equivalent to $315-$487 annually.
  • QLD: Prices will go up by 20.5%-21.5%, equivalent to $349-$402 annually.
  • SA: Prices will go up by 22.5%-23.9%, equivalent to $439-$512 annually.
  • VIC: Prices will go up by 22%-27%, equivalent to $278-$394 annually.

Renters should be prepared for more challenges ahead.

As a renter, it’s important to be aware of upcoming challenges. According to the CPI, rents have increased by 6.3% in the past year, but the RBA predicts that the rental component of the CPI could rise to 10%. Governor Philip Lowe has cautioned that rent growth will remain high for a while.

Adding to the difficulties, electricity prices have increased, making for an even more uncertain environment for Australian households.

Ultimately, the RBA is responsible for determining future interest rates and fighting inflation.