Confidence in Australia’s main electricity market has suffered its steepest collapse ever as the crisis engulfing the east coast’s energy industry hits home with consumers.
Key Points:
- Households are predicted to face multiple price rises next year amid energy crisis
- Experts say pricing system is ‘regressive’ and governments should try to help consumers
- Confidence in the market started to wane at the start of the year, but it seems to be hitting home now that the notes are being issued
Ahead of price hikes for many of EnergyAustralia’s customers starting on Thursday, Energy Consumers Australia (ECA) has seen an unprecedented drop in faith in the system.
Today the ECA, the peak lobby for household and small business energy users, will publish the results of a spot survey showing confidence has suffered its steepest fall since measures 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 record highs amid rising fossil fuel costs, outages at several coal-fired power plants and cold weather.
Lynne Gallagher, the chief executive of ECA, said confidence collapsed in June when the Australian energy market operator took the extraordinary step of suspending the market to keep the lights on.
“Truly alarming”
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 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 something that is abstract to something that is extremely real and based on real increases in real bills.”
Households with solar panels have been protected from the worst of the crisis, but not everyone is so lucky. (Provided by Project Symphony)
According to the industry body, barely one in three survey respondents believed the system was working in their long-term interests, compared with 44% in July.
The survey, which was carried out in August on a one-off basis to assess the effects of the crisis, also showed that the percentage of people who felt they were getting good value for their electricity fell from 62% to 53% with respect to the same period.
There has been a similar drop among gas customers.
Ms Gallagher said the findings were cause for concern.
“These results are truly alarming,” Ms Gallagher said.
“Consumer confidence in the market has fallen by 9% since June last year and is at its lowest level since 2020.
“Over the past month, we have seen a series of strong actions by energy ministers aimed at achieving a swift and orderly transition to 100% renewables in our system.
“While Australians support the pace of change, they cannot see how the actions taken so far will help them with the real concerns they have about the size of their energy bills now and in the future.”
Big energy users, such as aluminum smelters, have also been caught in the crosshairs of rising prices. (Provided by: Alcoa)
“Incredibly regressive”
Adding to consumer concerns, the organization said, was the ongoing nature of price increases.
Since July, millions of customers’ bills have increased across the NEM.
On Thursday, tariff increases to reduce inflation will come into effect for many of the 1.7 million customers supplied by the major retailer EnergyAustralia.
The increases follow a difficult period for the business.
Earlier this month, the Hong Kong-owned company reported a whopping $1.6 billion loss in the first half of the calendar year, citing “unprecedented market volatility” on the upside.
Joel Gibson, head of energy consumer advocacy group One Big Switch, said there was little good news for households as the current round of price rises was likely to be the last of year.
Gibson said the failure of successive governments to deliver lasting reform to guide the energy transition has left the wholesale market “a mess”.
He said consumers are now “on the hook” for this failure, which would take years to fix.
“Households have gotten used to this annual schedule where they can expect a price hike … they think it’s going to be 5 to 10 percent most years,” Gibson said.
“All of that has been blown out of the water this year – price increases for many households are double.
“Realistically, we can’t expect a single price hike this year … some households will have multiple hikes.”
More information on the cost of living in Australia:
Gibson also bemoaned what he said was the disproportionate effect of rising energy prices on poor and disadvantaged households, saying they were likely to be hit hardest.
He said poorer customers were 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 hits the lowest socio-economic demographic the hardest.”
Ms Gallagher agreed and called 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 deliver lower bills is to provide practical support so Australians can use energy smarter and more efficiently without affecting their quality of life.”
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