Confidence in Australia’s main electricity market has suffered its biggest collapse as the crisis affecting the East Coast energy industry hits consumers.
- There are predictions that households will face multiple price increases in the coming year amid the energy crisis
- Experts say that the price system is “regressive” and that governments should try to help consumers.
- Confidence in the market began to decline at the beginning of the year, but seems to be taking its toll now that the bills are being issued.
With one of the country’s largest energy retailers set to reveal price increases for many of its customers on Thursday, Energy Consumers Australia (ECA) has found an unprecedented drop in faith in the system.
Today, ECA, the top lobby for home and small business energy users, will release the results of a unique survey showing confidence suffered its steepest drop since measurements began in 2016.
The results follow a period of turmoil in the national electricity market, which serves more than 10 million customers in eastern states, including South Australia and Tasmania.
Wholesale electricity prices have soared to the highest levels on record amid rising fossil fuel costs, blackouts at several major coal-fired power plants and cold weather.
Lynne Gallagher, chief executive of the ECA, said confidence collapsed in June when the Australian Power Market Operator took the extraordinary step of suspending the market to keep the lights on.
Since then, Ms Gallagher said sentiment had continued to deteriorate as increases in household electricity bills began to bite.
“These results show that the collapse in consumer confidence that we saw in June was not a blip but a serious and ongoing concern,” he said.
“In the last month, many Australians will have received a bill from their electricity or gas retailer or a warning notice telling them how much their bill is likely to increase.
“Consumer concern has gone from being abstract to extremely real and based on real increases in actual bills.”
According to the industry body, just one in three respondents believed the system was working in their long-term interests, down from 44 percent in July.
The survey, which was conducted in August as a one-off measure to gauge the effects of the crisis, also showed that the percentage of people who felt they were getting value for money from their electricity fell from 62 percent to 53 percent during the last year. Same period.
A similar drop was recorded among gas customers.
Ms Gallagher said the findings were cause for concern.
“These results are really alarming,” said Ms Gallagher.
“Confidence that the market is delivering on consumers has fallen 9 percent since June last year and is at its lowest level since 2020.
“Over the last month, we have seen a series of strong actions from energy ministers aimed at achieving a swift and orderly transition to 100 per cent renewables in our system.
“While Australians are supportive of the pace of change, they cannot see how the actions taken so far will help them with the very real concerns they have about the size of their energy bills now and in the future.”
Major retailer EnergyAustralia is expected to unveil inflation-busting price increases for many of its 1.7 million customers after a tough run for business.
Earlier this month, the Hong Kong-owned company reported a whopping $1.6 billion loss for the first half of the calendar year and blamed “unprecedented market volatility” for the opposite.
Joel Gibson, head of energy consumer advocacy group One Big Switch, said there was little good news in store for households, and the current round of price increases was unlikely to be the last of the year.
Gibson said the failure of successive governments to deliver lasting reform to guide the energy transition had left the wholesale market “a mess”.
He said consumers were now “bearing the brunt” of that flaw, which would take years to fix.
“Households have gotten used to this calendar year where they can expect prices to go up… they think it’s going to be 5 to 10 percent most years,” Gibson said.
“All of that has gone up in smoke this year: price increases for many homes are twice as high.
“Realistically, we can’t expect a single price increase this year… some homes will see multiple increases.”
Gibson also lamented what he said was the outsized effect of energy price increases on poor and disadvantaged households, saying they would likely be hit the hardest.
He said poorer customers were also often unable to install rooftop solar panels because they couldn’t afford a system or lived in rental properties, meaning they faced a double whammy.
“The way we’ve priced electricity right now, not by design, mostly by accident, is incredibly regressive,” he said.
“It affects lower socioeconomic demographics more.”
Ms. Gallagher agreed, calling on governments to do more to help those in need.
“The factors driving high prices will be in play for the foreseeable future, but just because prices stay high doesn’t mean bills have to,” he said.
“The best way to reduce bills is to provide practical assistance so Australians can use energy more intelligently and efficiently without affecting their quality of life.”