Aussies warned to brace for power price change amid global turmoil
Aussies should brace for more electricity price pressure this year amid turbulent inflation and conflict in the Middle East, according to Compare the Market economic director David Koch.
With fuel prices having skyrocketed and private health insurance premiums set to rise next month, bills are becoming an even bigger financial hurdle for Aussie households.
That’s on top of record rents and increased mortgage repayments in the wake of last month’s interest rate hike.
Compare the Market economic director David Koch. Picture: Supplied
Now, the power bill looks to be the next living expense set to take a hit, according to Mr Koch.
“As we’ve seen in the past few months, we are not out of the woods when it comes to inflation yet and turmoil in the Middle East could put even more pressure on resources globally,” he said.
“Then factor in our dated infrastructure, transformation plans, network costs and big operating outlays, and it’s a much murkier situation.”
Mr Koch said several key factors could lead to higher electricity prices in 2026-27, including high inflation, network and distribution costs and retailers meeting the cost of federal and state renewable energy obligations.
Rising demand would also be a factor, with EV uptake and home electrification expected to push Australia’s electricity demand to almost double by 2050.
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EV uptake will contribute to Australia’s electricity demand doubling by 2050, according to Mr Koch
Aussies will get a clearer idea on where power prices are heading following the Australian Energy Regulator (AER) and the Essential Services Commission (ESC) releasing their draft benchmark pricing this month.
Mr Koch said Australians shouldn’t expect major bill reductions any time soon, even with a pull‑back in wholesale electricity volatility over the past year.
“Australians deserve some relief and I would argue that prices should stabilise, because we have seen some positive signs of easing pressure in the wholesale energy market,” he said.
“Some of those savings and benefits from people tapping into solar should start to drive down retail costs.
“Unfortunately, that’s just part of the picture, and the reality is we shouldn’t be lured into a false sense of security just yet.”
Even with increasing investment in renewable energy, Mr Koch said Australians may not feel the benefits for some time.
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The Australian Energy Regulator will provide more clarity on where energy prices are heading later this month. Picture: NewsWire/Nikki Short
Mr Koch said while everyday Australians may not be able to impact the bigger factors at play many could save on their bills by switching to a cheaper deal.
“Last year, 80 per cent of people with the power to switch were spending more than they needed to,” he said.
“That number has dropped to 73 per cent – a good improvement, but still a long way to go if we really want to move the needle on electricity inflation now all of the government rebates have rolled off.
Mr Koch said prices varied even with the same retailer and that those who haven’t switched providers in three years or more, spend an average of $221 more than new customers according to the ACCC.
“That’s a pretty compelling reason to shop around,” he said.
