NSW electricity bills to increase by an average of $200 per house from July 1

Young households face bill shock

Gen-Y share houses face increased utility costs with power retailers set to raise prices by 10-11 per cent from July 1.

When Ivan returned to Sydney after a six-month study exchange in Copenhagen, he noticed a few obvious differences between the cities.

But the one difference he is reminded of every quarter is that of electricity affordability in the Danish city, where his power bill was half what he pays now.

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"For bills in general in Sydney, I think there is quite a big difference between us and other developed countries," he said.

Ivan, 24, now lives in a share house in Chippendale with four other housemates. Every quarter they pay $60-$70 each for their electricity bill.

But, as of tomorrow, the Gen-Y household could be in for a fresh dose of bill shock to herald the new financial year.

Consumer group network One Big Switch estimates NSW households will face an average price rise of more than $200 a year in metropolitan Sydney.

While many retailers will wait until July 1 to announce their price rises, Origin Energy and AGL have revealed they will raise their prices by 10 and 11 per cent on average, respectively.

"The increase is definitely concerning," said Ivan. "The price of gas, electricity, internet; these are all basic human needs in a developed modern world and it is ridiculous how consumers are being taken for a ride and the government is unwilling...to step in."

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Estimates based on July 1 standing offers announced by Origin Energy and AGL only, suggest different household types will experience different levels of bill shock.

For a young or retired couple living together, they can expect a 10 per cent or $136.23 average annual increase.

In the case of a young family with a young child, prices could rise by 10.1 per cent or $158.16 on average.

"The [electricity price] increase is definitely concerning:" Ivan, 24, lives in a share house in Chippendale.
"The [electricity price] increase is definitely concerning:" Ivan, 24, lives in a share house in Chippendale. Photo: Nick Moir

An inner city student share house like Ivan's, with five people, is likely to see an increase of 10.2 per cent, a total of $215.22.

"The Victorian retailers, where prices are fully deregulated, have had much higher profit margins than other states," he said.
 

A family living in a five-person household with a pool in the suburbs will experience a rise of about 9.2 per cent or $251.69.

Grattan Institute energy fellow David Blowers said increased prices are largely the result of wholesale electricity price increases and gas generation setting the price in the market.

"Gas generation is a lot more expensive than coal generation," he said. "Not only are current prices high, but future wholesale electricity prices are expected to be higher, than historical prices. Retailers will have to cover this and put their prices up as a result."

The Minister for Industry, Resources and Energy Anthony Roberts said new figures showing more NSW consumers shopping around proved the electricity market was "increasingly competitive."

"The Australian Energy Market Commission is the latest to confirm the NSW Government's decision to deregulate retail electricity prices has benefited both families and small businesses by providing increased competition..."

But while deregulation may give consumers more opportunity to shop around, it also allows NSW retailers to push up their profit margins, said Alan Pears, senior industry fellow at RMIT.

"Also the increasing market power of the 'gentailers', who own both power stations and retailers, such as AGL and Origin, means they can crank up prices and may be more likely to manipulate pricing."

NSW Shadow Treasurer Ryan Park described the July 1 price rises in electricity bills and other government fees and charges as a "cash grab".

"Families, pensioners and small businesses already struggling with costs will be slapped with higher electricity prices thanks to Mr Baird and energy retailers," he said.

The Public Interest Advocacy Centre is currently representing consumers in a judicial review of a decision late in February by the Australian Competition Tribunal that had set the scene for planned price cuts of about $300 to the annual household power bill to be unwound.

Acting-chief executive officer of the PIAC Deirdre Moor warned that current price projections may just be the "tip of the iceberg."

"Prices are almost certain to skyrocket when the legal challenges to the Australian Energy Regulator's price determination are finally resolved."