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The Business
Topic:Cost of Living
Wed 24 Jun 2026 at 5:06am
Customers may notice increasing fixed or supply charges, but some are arguing that most will be better off. (ABC News: Kylie Silvester)
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.
Energy Minister Chris Bowen has asked the regulator to investigate whether the price hikes and how they have been communicated to customers breach rules.
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.
Alinta Energy customer Russell Smith was surprised to see his power charges increase. (ABC News: Olivia Sanders)
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.
Russel Smith received conflicting messages about power prices within the space of 24 hours. (ABC News: Rhiannon Shine)
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.
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."
Energy Minister Chris Bowen has asked the AER to look into whether retailers may have breached regulations with the increases, and how they were communicated to customers.
The minister said household energy bills were coming down due to the DMO, and the message to energy retailers was: "If your costs are coming down, your customers' bills should be too."
The regulator confirmed Mr Bowen sent a letter on Friday seeking advice on the changes to retailers' pricing structures.
Many customers expected lower power bills after the default market offer was announced. (Supplied)
"We are currently looking at how retailers are both structuring their energy plans and explaining prices to customers," the AER said.
"We will continue to monitor compliance with the energy rules to ensure customers are receiving accurate and useful information in line with the regulatory requirements."
The price rises are not confined to one or two retailers, but appear to be across most major power providers.
ABC News has seen price increase notices for customers from five of the largest electricity providers, plus a couple of popular smaller retailers.
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.
Surging levels of renewable energy and better reliability from coal-fired generators are set to give consumers a break, with benchmark power prices to fall up to 10 per cent for consumers and more for small businesses.
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."
Richard Foxworthy says it is entirely understandable that consumers are confused by the system. (ABC News: Darryl Torpy)
Mr Foxworthy explained that a decrease in the benchmark price gave 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.
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.
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 was 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.
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.
Louisa Kinnear says bills may appear to be increasing due to a "rebalancing" of charges. (Supplied)
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, their electricity bill is actually going up," Ms Kinnear told The Business.
Millions of Australians have been often unwittingly moved to complex and variable power tariffs. An energy watchdog says bills must be simplified.
The Business contacted a number of 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.
"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."
Ms Kinnear said the over-complexity of power pricing was a problem facing the energy industry and one it needed to tackle.
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.
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.
On the Sunshine Coast, Mr Smith is unimpressed by the whole affair.
While he understands energy companies have 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."
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