Add Category
Craig Souter likes to keep a close eye on his power costs.
The single father pays the mortgage and all the bills for his house at Worrigee in Shoalhaven on the south coast of New South Wales.
He says it means every dollar has to count.
"You're always on the lookout for the best deal," Mr Souter says.
"And I'll always compare. I'm not loyal … I'm happy to change.
"Because I had two boys living at home. We had a pool going, we had tablets on all the time, phones, internet, washing and long showers by teenage boys and all those sorts of things."
It was a shock to the 59-year-old, therefore, when his most recent power bill went from $600 to more than $1,400, leaving him with an acute case of bill shock.
He says the dramatic increase in his power costs was at least double anything he'd previously had to pay.
What's more, he says it came after his supplier Origin Energy installed a smart meter at his house.
"It's a hit, you know, because I earn okay money but I'd be only earning as much as everybody else," he says.
"I pay my own mortgage on my own. I pay all my own bills here, like electricity, insurance… everything.
"This is my place and I'm paying, so it's a killer."
A familiar and unhappy story
Through a spokesman, Origin Energy said Craig Souter's bill had risen because of increased usage, the underestimation of a previous invoice and a new, more expensive plan.
But his experience is not uncommon in an electricity market where prices have soared since the energy crisis two years ago.
The increases have helped drive a big rise in benchmark prices set by the Australian Energy Regulator and its Victorian counterpart, the Essential Services Commission.
Known as default market offers, the prices are effectively a maximum rate retailers can charge their customers.
About 10 per cent of residential customers are on default offers, rising to about 20 per cent of small business users.
However, they are widely used as a reference against which other prices are measured.
After rocketing about 40 per cent in the past two years, there had been hopes that recent falls in the spot market could deliver consumers some relief.
Some analysts have even suggested prices could fall by "double-digit" margins.
But with the regulators poised to release draft decisions for the new benchmark prices that will come into effect from July, experts aren't so sure.
Josh Stabler, the managing director at advisory firm Energy Edge, is urging caution.
"I would say that we're going to be plus or minus a few per cent here in terms of the pricing," Mr Stabler says.
"This is, despite some rhetoric regarding lower prices in the spot market.
"I just don't see that passing through to the final calculation on the DMO.
"Now, this is all just based on the data that we can see in the market, the (AER) will do its own analysis independently in its own process and may come to its own conclusions."
Costs and bills likely to stay high
According to Mr Stabler, while wholesale electricity costs have come down from their record highs, they remain elevated.
At the same time, he says rising interest rates and inflation are pushing up network costs — that is, the poles and wires — which typically account for the biggest share of a power bill.
Crucially, Mr Stabler says the regulators are required to factor in expected future wholesale power prices when setting benchmark tariffs for the coming year.
And these future — or forward — wholesale costs are not tipped to decrease in any material way, he notes.
"Now, when we take a look at what's happened in the last 10, 12 months, the conditions for 2024-25 are generally the same as what they thought in May 2023 for the previous financial year," he says.
"The market conditions for the new financial year aren't substantially different.
"They might be 5 per cent below or about even. It's not 20 per cent below, but it's not 20 per cent above."
On ABC Radio recently, AER director Justin Oliver echoed the cautionary tone.
He said that even though the energy crisis of 2022 was largely a memory, the extraordinary prices it caused were "still making their presence felt a little bit".
"Broadly speaking, we're not anticipating huge movements in either direction," Mr Oliver said at the time.
"It may go up or down depending on where people live.
"We're not expecting big increases but we're not necessarily expecting big decreases either at this stage."
Shop around, consumers told
Energy Consumers Australia, which represents residential and small business users, says the worst of the price rises appears to be over even if challenges remain in the market.
But Jacqueline Crawshaw, the group's policy director, says that regardless of the decisions ultimately taken by regulators, consumers need to shop around for the best deal.
"We're hearing some stories about some of the challenges in the market," she says.
"But we're also hearing some good stories as well in terms of the wholesale price, which seems to be easing a bit lately.
"So, we're hopeful that what we'll see is not as bad an outcome as what we've seen over the past couple of years.
"The last couple of years we've seen increases of 20 per cent and that's unsustainable for consumers."
Shoalhaven householder Craig Souter, for one, isn't holding out much hope.
"Put it this way — in six years' time I'm looking to retire, so I'll have super and pension," Mr Souter says.
"So, if I'm going to be paying that sort of money, that's over $5,000 a year just in electricity.
"How do you survive? How does anyone survive?"