Firstly, what is the NEM?
The NEM is the National Electricity Market and it operates across NSW, the ACT, QLD, SA, VIC and TAS. It facilitates the exchange of electricity between generators and retailers – or gentailers like Origin.
The NEM is a wholesale electricity market that also encompasses the physical assets – like the poles and wires that are owned and operated by distributors. Electricity is moved around the system and sold through a ‘pool’, for wholesale trading in physical electricity. Like gold or oil, gas and electricity are traded on an open market, and like other commodity markets, this means supply and demand influence the price.
TLDR: The wholesale market is where generators, or gentailers, sell electricity to retailers who then on-sell it to businesses or households.
What are reference prices?
Reference prices act as a benchmark that all retailers need to advertise their electricity offers against to help make it easy for customers to compare different offers. The reference price is also a default offer that regulators set as a safety net for customers who are on standing electricity offers – meaning they can’t be charged more than that rate.
Depending on your state, they go by different names –in Victoria it’s the Victorian Default Offer or VDO and in NSW, SA and some parts of QLD it’s the Default Market Offer or DMO.
Of course, the amount you’ll actually pay will depend on how much electricity you use. For more info, check out our pricing explainer
What is happening to household energy bills in 2024?
Wholesale electricity market prices have stabilised from the extreme levels seen over the past couple of years. However, this won’t necessarily mean lower bills for all households.
The easing in wholesale electricity market prices has been offset in some areas by increases to network prices, with the cost of poles and wires making up around 40% of the average electricity bill.
The Australian Energy Regulator recently announced its Default Market Offer (the “price cap” for standing electricity offers in NSW, SE QLD and SA) stating that “Most residential and small business customers on standard retail plans will experience price reductions, with any increases to be less than, or broadly in line with, the rate of inflation.”
From 1 July 2024, the default market offer for residential customers is reducing between 0.2% to 5.9% in some areas, while in other areas it will increase between 2.2% and 4.9%. The change depends on the region and whether there is controlled load (such as underfloor heating or a pool pump running overnight). The default market offer for small business customers will reduce between 1% and 9% in some areas while in others it will increase around 1%.
In Victoria, the Essential Services Commission announced that the Victorian Default Offer (the benchmark price for electricity in VIC) will reduce by around 6% for residential customers and around 7% for small business customers. In ACT, the ICRC increased the reference price by 12.75% mainly driven by increased network costs.
See a detailed breakdown of what goes into an average Australian energy bill.
Your energy provider will let you know if your prices are going to change. It’s important to understand that the Default Market Offer and Victorian Default Offer decisions, and reasoning, are independent to retailers’ decisions to set their market rates. They’re a safety net for customers on standing offers, to protect those who don’t shop around for a better deal. Each energy retailer reviews and decides on how they price their market offers.
At Origin we set our rates taking into account a number of factors, including what’s going on in the wider energy market. Learn more about market VS standing rates and your rights as an energy consumer.
We’ll let you know if your prices are changing
If your prices are changing, we’ll let you know. Our aim is to make sure that Origin customers pay energy prices equal to or below the Default Market Offer on 1 July 2024 when these price changes come into effect.
For customers in financial hardship, who may be struggling with their energy bills, we have tailored support available through our Power On program. We strongly encourage anyone needing support to reach out so we can help.
What goes into an average Australian energy bill*
Getting to know the costs that make up your energy bill can help you understand how the wider energy market affects what you pay.
Environmental costs (8%)
These charges are for government programs that support the development of renewable energy.
Network costs (50%)
The physical poles and wires that carry electricity to you and the pipes that bring you natural gas are called “the network”, and they’re managed by your distributor.
Distributors take care of:
- building, maintaining and operating electricity wires and poles, and natural gas pipes
- transporting energy to your home or business
- managing blackouts and outages
Your energy retailer’s costs from different distributors can make up a significant part of the final costs to you. You can find out who your distributor is on our distributor lookup page.
Retail costs (12%)
This is what it costs retailers to run their business. It includes operating costs like staff wages, customer service operations, office spaces and more. The 12% includes the retailer’s profit margin. As you can see, retail costs and margin are generally one of the smaller contributors to an average bill.
Wholesale costs (30%)
Think of the electricity market like the stock market. Different generators (like coal and gas-fired power stations, solar, hydro and wind farms) sell the electricity into the wholesale market, and retailers buy it. Just like stocks, the purchase price goes up and down all the time.
According to the Australian Energy Market Commission’s trends, costs that retailers like Origin pay for electricity on the wholesale market generally make up around a third of a total electricity bill.
*Based on an average residential electricity bill in 2023 – 24. Source: Australian Energy Market Commission
How to check you’re on the best plan for your household
1. Firstly, you’re going to want to compare your rates by grabbing your most recent energy bills. If you’re an Origin customer, you can do this in a few clicks via My Account or the Origin app – simply select ‘view plan’ from the dashboard and we’ll show you the details of your current plan, including your supply and usage charges and any benefits that might be included, like Everyday Rewards points or your solar feed-in tariff. Jot these down so you’re armed with all the right info.
2. Now you’re going to want to check not only the % comparison to the Default Market Offer (if you’re in NSW) or the Victorian Default Offer (if you’re in VIC), but also the usage and supply charges (including peak and off-peak if you’re on a time-of-use tariff).
3. If crunching numbers isn’t your thing, there are a few government websites that make it easier including Energy Made Easy (if you’re in NSW, SA, QLD or the ACT) or Victorian Energy Compare (if you’re in VIC). Just make sure you have your rates, or bills, handy so you can enter your details into the calculators.
4. You’ll also want to consider things like how easy it is to get in contact with your provider (do they offer a mobile app or can you email them instead of having to call?), what payment options they offer and whether they offer benefits for bundling additional services or green options.
Helpful ways to reduce your energy bills
We understand that many Aussie households are already feeling the pinch of increased cost-of-living and are looking for ways to reduce their energy costs. There are some small steps households can take to limit the impact of energy bills on their budgets.
- Check you’re on the best energy plan for your needs.
- Adopt energy-saving habits; like switching off unused appliances to avoid vampire power, opting for smart plugs and joining in on SpikeHours to get rewarded for meeting energy-saving goals.
- Change your usage habits with the seasons. For example, winter sees many of us switching on heaters and spending more time indoors, whereas summer sees us flicking on the air conditioner to keep cool. We have plenty of winter energy-saving tips and summer energy-saving tips to help you adapt your usage habits to the season.
- Consider making the switch to monthly billing. If you have a digital or smart meter, you may be eligible. Reach out to our team via hello@origin.com.au and we’d be happy to check whether you can make the switch.
- Chip away at bills with smaller, more regular payments. Choose to make payments via Bpay, Centrepay or set up an ongoing payment plan.
Help is available
We know the rising cost of living is a very real concern for many households. If you need help with your energy bills, we have a range of support available. From extensions to payment plans and our Power On Program – we’re here to help. We encourage anyone needing some extra assistance to reach out, so we can provide tailored support.
