Energy bill shocks still a threat even with the price cap

Over the last 12 months, power bills for the typical Australian household have soared, driven by the war in Ukraine and international demand.

Federal Minister for Industry Ed Husic said prices had been forecast to increase another 20% per year for the next two years.

To stop this trend, the federal government has intervened to curtail price increases in 2022-23 to about 18% and to limit the increases for the following two years to around 4% per year.

Vulnerable customers’ energy bills will be subsidised by a $1.5 billion bailout from federal funding, which will be matched by the states. But the details of this subsidy have not yet been worked out.

So will your electricity bill decrease?

No, unfortunately not. These measures were implemented to curtail the massive increases, but there will still be slight increases, and no decreases – unless you’re considered a vulnerable customer (unemployed, pensioner or a low-income family).

Will the price caps help long-term?

Locally, the lobby representing oil and gas producers (APPEA) have condemned the price caps, because they feel the price caps will disincentivise new suppliers from entering the market, which will reduce supply. When demand outstrips supply, prices tend to increase.

But the demand for gas is now outstripping supply, and this is expected to worsen if Russian gas is removed from the market.

The solution for Australia is to expand solar, battery, wind and pumped hydro capacity – but these systems require transmission lines to take the energy from where it’s created to where it’s needed. This process is neither cheap nor easy.

So what can you do?

The more self-sustainable you can be, the less you will be impacted by rising energy prices.

One way to become more self-sufficient is to install solar panels and/or battery storage. A solar power system produces free power you can use during daylight hours. A battery stores the energy for you to use later, so even on rainy days, you can be largely self-sufficient.

You might also qualify for government subsidies from the Federal government or a green loan to install solar panels and/or a battery. If you’d like to look into this, we can guide you on what options you will be eligible for.