Given the recent movements in wholesale electricity prices, it’s not surprising that the Essential Services Commission have just announced that the Victorian default electricity offer (VDO) will increase by about 5% from 1 July 2022.
What does this mean for the average annual electricity bill in Victoria? Households can expect to see an increase of $61 per year if they are on the default offer, with a rise of around $270 per year for small business customers.
Following on from this, it’s likely that other retail electricity plans – called market contract offers – will also increase in price. Increases will be roughly in line with the VDO increase, so all customers can expect to see prices going up to some extent.
Why is the wholesale price increasing, and how does it affect the price I pay my retailer?
There are several reasons for the price increases:
- AEMO, the market operator, reported that wholesale electricity prices increased by a whopping 141% in the first quarter of 2022, compared with last year.
- The increase has been blamed on a combination of factors. These include more costly fossil fuels and the falling reliability of coal-fired power plants. The outcome has been a reduction in available power supplies compared to last year. Combined with higher gas prices, this has led to increasing wholesale prices.
- Prices are also affected by an increase in network costs.
The future forecast for electricity wholesale costs is behind this increase. It accounts for approximately two thirds of any price increase passed on to the customer in the form of higher retail prices. The rest of the price increase is because of rising network distribution costs.
How to protect yourself from the forthcoming electricity price rises in Victoria
If you’ve been with your current retailer for more than a year then it’s time to check the market. You could find better electricity plans with better rates. It’s important to take advantage of current offers available before the price rises take effect in July.
To check the whole market (not just your current retailer) give Joulius a go. All we need is one recent bill in pdf format to get started. We compare all retailers Generally Available plans of the same tariff type as your current plan, to find you savings. Get started here – it will take you less than 5 minutes and it’s completely free to join and free to switch.
