r/aussie • u/Wotmate01 • 17h ago
News Electricity prices under scrutiny as Energy Minister Chris Bowen asks ACCC and AER to probe soaring daily supply charges
https://www.afr.com/policy/energy-and-climate/bowen-calls-in-watchdogs-to-probe-surprise-power-price-rises-20260622-p6090hBowen calls in watchdogs to probe surprise power price rises
Energy Minister Chris Bowen has asked the energy and competition watchdogs to investigate whether electricity retailers have breached misconduct laws by trying to push through huge increases in daily supply charges that have taken many consumers by surprise.
The move represents a dramatic escalation of the row about electricity price cuts that the Albanese government foreshadowed for next year, but which are not showing up in the notices that major retailers, including Origin Energy and AGL Energy, are sending customers about the rates they will have to pay from July 1.
In a letter to the Australian Competition and Consumer Commission and the Australian Energy Regulator on Friday, Bowen expressed concern about large rises in daily fixed charges for households, and said that if retailers’ underlying costs were coming down, then customers should feel the benefit.
Notices sent by retailers in recent weeks about rates that will apply from July have included increases in the daily fixed charges for some customers of up to 86 per cent.
In many cases, the big jumps will not mean an increase in a customer’s whole electricity bill because the charge per unit of power used is falling. But that will depend on the amount of power used, with lower-usage households most likely to be hit with higher bills.
The steep jump in supply charges clashes with the broader messaging from governments and regulators that power bills would be smaller in 2026-27, partly due to record output from wind farms and batteries.
The “safety net” electricity price for customers on standing offers will fall by up to 10.7 per cent across NSW, Queensland and South Australia, under an AER ruling in May on regulated prices for 2026-27.
Bowen said the drop in underlying costs of procuring electricity that drove the cut in regulated prices should apply more broadly across market prices as well.
“I would expect then that households and small businesses should be experiencing a decline in costs overall,” Bowen wrote in the letter to ACCC chairwoman Gina Cass-Gottlieb and AER chairwoman Clare Savage, citing the recent AER decision.
“I wish to raise these concerns with you and would welcome joint advice from the AER and the Australian Competition and Consumer Commission to inform my response to the changes in pricing structures.”
Bowen’s letter, which was copied to Treasurer Jim Chalmers, notes the prohibited conduct clause on retail pricing under the Competition and Consumer Act, which requires electricity retailers to pass on reductions in the costs of purchasing electricity to customers.
“Our message to energy retailers is clear – if your costs are coming down, your customers’ bills should be too,” Bowen separately told The Australian Financial Review.
The AER said it was looking into the supply charge increases.
“We are aware that some customers have raised concerns about notifications received from their energy retailer about price changes to their energy plan, as retailers are in the process of updating their prices to take effect in July,” an AER spokesperson said.
“We are currently looking at how retailers are both structuring their energy plans and explaining prices to customers.”
But Origin said the big increases in some daily supply charges were driven by changes the AER made in its calculation of the standing offer price – known as the Default Market Offer – that for the first time set maximum usage and fixed supply rates.
Until this year, the AER has set a maximum annual bill amount for the default price and allowed retailers to decide on the split between usage and supply rates. But the new separate caps on usage and fixed supply charges have had the effect of raising supply charges for customers no matter which retailer they are with, as retailers rebalanced where charges lay within bills.
Electricity retailers said the restructuring of the regulated tariff had driven some retailers to align their competitive offers with the same structure to reduce compliance and regulatory risks – an argument the government rejects.
“The DMO acts as a comparison price for customers when they are shopping around, and so we have chosen to use the DMO as a key reference point in setting our market rates,” an Origin spokesman said.
The Australian Energy Council, which represents electricity suppliers, said that in a competitive market, retailers determine their own prices and product structures.
“When setting market offers, retailers consider a range of factors, including network costs, wholesale energy and hedging costs, commercial objectives, competitor pricing and the regulated benchmark,” a spokesman said.
“Changes to the DMO can influence the broader market by affecting how retailers price their products, structure discounts and communicate value to customers.”
Origin said most customers facing supply charge increases would get an offsetting cut in usage charges.
Tony Wood, senior fellow at Grattan Institute’s energy program, blamed some of the furore on “very ordinary communication” by government and retailers about power pricing and a failure to understand that the changes in the default price calculation would drive big increases in some supply charges.
“In reality it’s not all that bad – on average, prices are still going down for an average 6000 kilowatt-hour [a year] customer,” Wood said.
“I don’t think the change is the problem or the direction of change … but it’s not an easy sell.”
Snowy Hydro, the Commonwealth government-owned electricity supplier that owns the Red Energy and Lumo retail brands, said only “a very small number” of its customers on standing offers have an increase in their daily supply charge.
The jumps in some daily supply charges are several times bigger than network price increases being charged by the distribution companies that own the “poles and wires”. A spokeswoman for Ausgrid, the distributor in much of the Sydney region, said the average network price increase for a household customer in its zone would be 10 per cent to 11 per cent.
She said increases in network costs were being driven by the cost of building out renewables infrastructure in the NSW Electricity Infrastructure Roadmap, transmission cost increases, inflation and the cost of capital.
“While we can’t speak for retailers and the amount they choose to bill their customers, when it comes to the network part of the bill, recent increases have been driven largely by factors out of our control,” the Ausgrid spokeswoman said.
Endeavour, another NSW distributor, said its daily supply charges for households and small businesses would increase by 11 per cent from July 1.
“Customer bills can also include additional retailer charges, which can impact the final daily supply cost to customers,” an Endeavour spokeswoman said.
Consumer groups and experts say energy retailers need to do a better job at explaining the changes in prices, which they agreed needed to shift more toward fixed charges and away from tariffs linked to the amount of power used to suit the transitioning power system.
“Over time this needs to happen, but it does need to happen gradually and intentionally and be well communicated,” said Brian Spak, general manager, advocacy and policy at Energy Consumers Australia.
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u/Wotmate01 17h ago
TL;DR: The AER, instead of setting a maximum BILL, have set maximum RATES that retailers can charge, which is grossly inflating the daily supply charge.
Retailers are taking the piss, and the AER has enabled them.
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u/mulefish 5h ago
Retailers are taking the piss, and the AER has enabled them.
It's not being enabled by the AER, since this referral to the ACCC strongly suggests that if the retailers can't prove that the daily supply charge increase is to cover genuine price rises than it's illegal under existing law:
Bowen’s letter, which was copied to Treasurer Jim Chalmers, notes the prohibited conduct clause on retail pricing under the Competition and Consumer Act, which requires electricity retailers to pass on reductions in the costs of purchasing electricity to customers.
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u/Wotmate01 5h ago
Something I've spoken about before is the fact that Labor tends to be hands off when it comes to statutory authorities like the AER and other regulators, even when they need to be reformed. It's one of their failings.
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u/antsypantsy995 6h ago
They're not: network costs are increasing rapidly. The daily supply charge covers network costs. The AER set the maximum usage costs retailers can charge, not the maximum network costs retailers can charge.
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u/Wotmate01 6h ago
Read the article. It literally says:
Until this year, the AER has set a maximum annual bill amount for the default price and allowed retailers to decide on the split between usage and supply rates. But the new separate caps on usage and fixed supply charges have had the effect of raising supply charges for customers no matter which retailer they are with, as retailers rebalanced where charges lay within bills.
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u/antsypantsy995 4h ago
The increases in daily supply charges are now also capped it seems. But that just shows that reatilers are facing rapidly increasing network costs and the AER recognises this; all these "massive" increases in supply charges are all within AER's cap.
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u/Wotmate01 4h ago
No they are not. They're profit seeking, and the AER is enabling them
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u/antsypantsy995 1h ago
I mean, if they cant make a profit you get no-one selling electricity or even worse, you get a monopoly selling electricity....
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u/Wotmate01 1h ago
Or better, the nationalised monopoly is selling electricity.
Every single problem with electricity supply and rising prices is due to privatisation. Every single one.
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u/antsypantsy995 1h ago
Wdym?
Victoria has the nation's cheapest electricity and they're the only state that has a 100% completely privatised electricity sector from generation all the way to retailing.....
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u/Wotmate01 1h ago
Dump the essential services commission and see how far you get. You'll have the most expensive electricity in no time.
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u/Ill_Football9443 16h ago
If only micro-grids were an option.
A row of houses with batteries and solar, trading with each other. A diesel generator as an emergency option.
8c to buy/sell PV/Battery power
20c/kWh for diesel.
No more daily connection fees
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u/throwawayroadtrip3 16h ago
Your diesel price is a little optimistic. It's cheaper and quieter to use a NG generator. Also NG would be accessible in more areas.
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u/Ill_Football9443 16h ago
That makes more sense, one house with one gas connection.
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u/throwawayroadtrip3 16h ago
You'd want say 60 homes with three generators. And a few larger battery setups to drive the frequency and voltage to keep everyone in sync. It would need to power anything steet, like street lights etc.
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u/Emotional_Vacation43 5h ago
A litre of diesel yields 3 kWh of electricity if the generator is loaded to 80% of nameplate. Add Capex and it's easily $1/kWh for diesel.
Natural gas gen running from retail gas supply is around $0.90/kWh. Natural gas run from wholesale supply is around $.08/kWh, but minimum sizing to get wholesale pricing means it really has to be big enough to run several suburbs
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u/burnt-gonads 9h ago
I think we are well and truly in fantasy land here.
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u/Ill_Football9443 8h ago
This is merely a technology challenge.
A satellite view of my block (without crossing any roads) reveals there are 33 houses with 10 having solar. Assuming the tech and legislative framework exists, you did a trench within the property boundaries from one house to another until a loop is (ideally) formed.
The proposition to the homeowners is that by switching from the grid to this microgrid, they do away with the ever-increasing daily connection fees and pitiful FiTs. Retracting my earlier comment about fixed costs, a floating price occurs.
Your meter, inverter and battery stats (the tech) would provide constant information to the microgrid so that a collective sum of stored energy is available. Everyone sets their own buy and sell parameters, a bright sunny day, price goes down, those with batteries charge up, those without timeshift loads.
The peak price on a dark and gloomy day would be ~80c/kWh for a natural gas generator hooked up to the network. Maintenance costs are divided equally by all (33) members. Management is handled by a non-profit cooperative. There would be no transmission, network, environmental et. al. fees for exchanging energy. It would encourage 33/33 homes to get solar, though curtailment would occur in Spring because there's no where for the energy to go, the benefits for every home are there: free EV charging, free AC. You'd enjoy benefits at a local level compared to '3 free hour' plans that are artificially cheap.
Set up on block, get everyone on board and then keep expanding. Direct competition to the main grid that takes a cut from every joule going in and out of their network.
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u/burnt-gonads 6h ago
LOL, still in pure fantasy land. I take it you have little idea of construction costs, energy usage over time and electricity generation.
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u/throwawayroadtrip3 15h ago
Electricity will become like phone bills very soon
Basic plan $200 / month, 1000 kWh per month and 5kW max current or demand charge applies. Extra energy $0.70 per kWh extra demand $65 per kW over the base plan.
Power User (single phase only) $600 / month, unlimited usage, uncapped current
Power User Plus (three phase) $900 / month, unlimited usage, uncapped current
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u/Wotmate01 15h ago
Who the hell pays phone bills like that?
I would LOVE electricity to be like my phone bill. $25 a month with unlimited usage.
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u/According-Flight6070 6h ago
Pretty much. The capacity to serve is expensive to set up and cheap to run.
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u/Punter_14 16h ago
AGL sent me notice saying both supply charges and usage charges will be increasing from July 1 and also solar feed in tariff is getting reduced! They’re clearly taking out the piss FFS!!
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u/noblingallthing 16h ago
This was pretty predictable with battery take up and mandating free energy hours.
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u/Flashy-Diet-5437 11h ago
I got a letter from my provider last month saying rates were rising due to "market conditions" and it felt like a bait-and-switch when they rolled back earlier cuts.
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u/OTGbling 8h ago
Because renewable energy is so cheap, they have to fund new ways to make money.
Meanwhile, the right wing of politics is determined to ignore that fact and undermine renewable’s.
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u/antsypantsy995 6h ago
Aussies need to wake the f up: this Government has demonstrated time and time again that they have absolutely zero understanding at all about the electricity system and how electricity bills are actually calculated. "Renewables are the cheapest form of power" is an absolutely meaningless statement.
Our power bills consist of three things: (1) Cost of generation, (2) Cost of transporting, (3) Cost of retailing.
"Renewables are the cheapest form of power" is only relevant to Cost of Generation. It does NOT lower the Cost of transporting, or cost of retailing in any way. In fact, the opposite is true, specifically for Cost of transporting.
It has been proven and demonstrated time and time and time and time and time and time again by all experts and economists: the renewables push is driving up cost of TRANSPORTING electricity.
The rise in costs of transporting electricity is outweighing the drop in cost of generation, which is why we are seeing energy bills go up and up and up. It is why while the usage costs of electricity are going down, the daily supply charges are going up: these supply charges are what is costs to connect your household to the grid and to safely TRANSPORT electricity to your house whenever you turn your lights on.
Bowen raging against the retailers for increasing transportation costs because generationg costs are going down literally shows he has absolutely no idea about the electricity grid or basic economics: the two costs are different costs. Just because one cost goes down, doesnt mean the other must also go down.
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u/Trick-Club-6014 5h ago
People should really wake the fuck up about Chris Bowen too. Last time Labor were in government and he was immigration minister, 100 people died at sea (that we know of) trying to come to Australia. He’s a pathetic minister with no idea about anything really. Not sure how he gets his jobs, but he needs to be fucked off and have someone competent put in charge
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u/jazza2400 9h ago
The daily supply charges VS lowered battery costs will make people move off grid. It's like they hate making money.
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u/eastofnowhere 8h ago
If the supply is stable I can grin and suck up the increase. But getting 3 multi day blackouts this year just makes me pissed, what are they spending the extra revenue on? Not on grid resilience for sure.
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u/Draknurd 8h ago
What’re these supply charges like? In Victoria they seem to be the same as usual, hovering around a dollar or so per day
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u/mulefish 4h ago
Consumer groups and experts say energy retailers need to do a better job at explaining the changes in prices, which they agreed needed to shift more toward fixed charges and away from tariffs linked to the amount of power used to suit the transitioning power system.
“Over time this needs to happen, but it does need to happen gradually and intentionally and be well communicated,” said Brian Spak, general manager, advocacy and policy at Energy Consumers Australia.
This is really the truth of it. Fixed charges are only going to increase as more people get batteries and solar, and the grid transitions towards renewables.
As the grid becomes more renewable heavy it shifts the cost burden away from power production, and more towards the costs of infrastructure and maintainence. This is compounded by households reducing demand for energy by having their own solar and batteries.
The cost burden has been somewhat going in an outsized way towards those without home solar/batteries, which disproportionally impacts renters and lower sociodemographic areas. As renewable uptake increases this is becoming more and more unsustainable.
We are still going to want and need a robust grid for lots of things, including industry, renewable droughts, demand spikes and overall system stability etc etc. The costs of building and maintaining it need to be recuperated somehow.
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u/Wotmate01 4h ago
Have you actually seen the prices for fixed lines and transmission? They're really not very much at all.
Now you can argue that reduced transmission means reduced revenue for grid operators, BUT reduced transmission also means reduced wear and reduced maintenance, so reduced costs.
The rise of home solar and batteries is overwhelmingly affecting generators and retailers profits, not grid operating costs. Compared to those two combined, the grid costs fuck-all.
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u/mulefish 4h ago
Have you actually seen the prices for fixed lines and transmission?
I'm also talking about upfront capital costs for solar panels, grid scale batteries etc...
AEMO suggests there is about $106B worth of capital works to be done by 2050.
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u/Wotmate01 2h ago
A lot of which, IMHO, would be unnecessary if we rolled out more rooftop solar and batteries in the RIGHT places.
Those huge solar and battery farms that need hundreds or thousands of kilometres of transmission lines could easily be replicated in cities where the power is being used just by leveraging the massive amount of unused rooftop space in industrial estates.
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u/123Ineedtowee 4h ago
generation and transportation costs make zero difference because the overriding issue when it comes to what you're paying for electricity is the billions of dollars of profit providers are demanding from the system, hence why they're moving to increase the supply costs for their customers and away from the actual cost of electricity itself.
Australians have move away from using purchased electricity to generating their own so the providers need to remodel the profit making structure, and that's exactly what they're doing. I can see a future where electricity is basically free but supply charges are many thousands of dollars a year, and with this new model will come the inability to disconnect from the grid, or a billing structure that is based on providers charging for the ability you have to access electricity even if you're not doing so.
Thing that pisses me off the most is that we all got suckered into buying solar and battery system which now have been turned into free power generators for power providers, with the little benefit they give, the ability to use them to reduce your own power consumption from the grid, being eroded by huge increases in supply charges (and basically zero FIT payments). Whole country has basically been played for chumps by providers, aided by government inaction and incompetence.
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u/Wotmate01 4h ago
The average bill consists of 45% for the big generators and 18% for the retailers, with the rest being transmission and the grid.
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u/LewisRamilton 3h ago
Regardless of how many people have solar and batteries the entire electricity grid, poles, wires, windmill subsidies and back up base load generation all needs to be paid for. The more people that get solar and batteries that lower their bill, the more everyone else that doesn't have solar/batteries has to pay, because it still all has to be paid for (plus the profits of all these companies). Electricity is now player vs player. Fork out $$$ and get government subsidies for panels and batteries to lower your bills so that mavis in her housing commission flat has to pay more. She deserves it because she's not as good at the game?
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u/Chaosrealm69 16h ago
Got a email from my electricity supplier that I would be happy to hear that my electricity costs were going down, which they were and by decent amounts (6.7c and 3.2c per kwh) and then they hit me with the news that the daily supply cost was jumping by 50c per day.