The past few years have been some of the most eventful in the history of the Australian energy market. But, over the last twelve months, energy markets have stabilised from the impact of Russian war and supply chain issues. We\u2019ve spoken to our energy experts to get the lowdown on what\u2019s happening in the National Electricity Market (NEM) in 2024. <\/p>\n\n\n\n
The NEM<\/a> is the National Electricity Market<\/a> and it operates across NSW, the ACT, QLD, SA, VIC and TAS. It facilitates the exchange of electricity between generators and retailers \u2013 or gentailers<\/a> like Origin. TLDR:<\/strong> The wholesale market is where generators, or gentailers, sell electricity to retailers who then on-sell it to businesses or households. <\/p>\n\n\n\n Reference prices<\/a> 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<\/a> is also a default offer that regulators set as a safety net for customers who are on standing electricity offers \u2013 meaning they can\u2019t be charged more than that rate. Of course, the amount you\u2019ll actually pay will depend on how much electricity you use. For more info, check out our pricing explainer<\/a> <\/p>\n\n\n\n Wholesale electricity market prices have stabilised<\/a> from the extreme levels seen over the past couple of years. However, this won\u2019t necessarily mean lower bills for all households. <\/p>\n\n\n\n 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%<\/a> of the average electricity bill. \u00a0 From 1 July 2024, the default market offer<\/a> 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).\u202fThe default market offer<\/a> for small business customers will reduce between 1% and 9% in some areas while in others it will increase around 1%. <\/p>\n\n\n\n In Victoria, the Essential Services Commission<\/a> announced that the Victorian Default Offer<\/a> (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<\/a> increased the reference price by 12.75% mainly driven by increased network costs. <\/p>\n\n\n\n See a detailed breakdown of what goes into an average Australian energy bill<\/a>. <\/p>\n\n\n\n Your energy provider will let you know if your prices are going to change. It\u2019s important to understand that the Default Market Offer<\/a> and Victorian Default Offer<\/a> decisions, and reasoning, are independent to retailers\u2019 decisions to set their market rates. They\u2019re a safety net for customers on standing offers, to protect those who don\u2019t shop around for a better deal. Each energy retailer reviews and decides on how they price their market offers. If your prices are changing, we\u2019ll 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.<\/em> <\/p>\n\n\n\n For customers in financial hardship<\/a>, who may be struggling with their energy bills, we have tailored support available<\/a> through our Power On program. We strongly encourage anyone needing support to reach out so we can help.<\/p>\n\n\n\n Getting to know the costs that make up your energy bill can help you understand how the wider energy market affects what you pay. <\/p>\n\n\n\n These charges are for government programs that support the development of renewable energy. <\/p>\n\n\n\n The physical poles and wires that carry electricity to you and the pipes that bring you natural gas are called \u201cthe network\u201d, and they\u2019re managed by your distributor. <\/p>\n\n\n\n Distributors take care of: <\/strong><\/p>\n\n\n\n Your energy retailer\u2019s costs from different distributors can make up a significant part of the final costs to you. You can find out who your distributor is<\/a> on our distributor lookup page. <\/p>\n\n\n\n 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\u2019s profit margin. As you can see, retail costs and margin are generally one of the smaller contributors to an average bill. <\/p>\n\n\n\n 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. <\/p>\n\n\n\n According to the Australian Energy Market Commission\u2019s trends,<\/a> costs that retailers like Origin pay for electricity on the wholesale market generally make up around a third of a total electricity bill. <\/p>\n\n\n\n *<\/strong>Based on an average residential electricity bill in 2023 \u2013 24. Source: Australian Energy Market Commission<\/a> <\/p>\n\n\n\n 1. <\/strong>Firstly, you\u2019re going to want to compare your rates by grabbing your most recent energy bills. If you\u2019re an Origin customer, you can do this in a few clicks via My Account<\/a> or the Origin app<\/a> \u2013 simply select \u2018view plan\u2019 from the dashboard and we\u2019ll 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<\/a> or your solar feed-in tariff<\/a>. Jot these down so you\u2019re armed with all the right info. 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. <\/p>\n\n\n\n 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<\/a>. From extensions to payment plans and our Power On Program<\/a> \u2013 we\u2019re here to help. We encourage anyone needing some extra assistance to reach out<\/a>, so we can provide tailored support.<\/p>\n\n\n\n
The NEM is a wholesale electricity market that also encompasses the physical assets \u2013 like the poles and wires<\/a> that are owned and operated by distributors. Electricity is moved around the system and sold through a \u2018pool\u2019, 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.<\/p>\n\n\n\nWhat are reference prices?<\/h2>\n\n\n\n
Depending on your state, they go by different names \u2013in Victoria it\u2019s the Victorian Default Offer<\/a> or VDO<\/a> and in NSW, SA and some parts of QLD it\u2019s the Default Market Offer<\/a> or DMO<\/a>. <\/p>\n\n\n\nWhat is happening to household energy bills in 2024?<\/h2>\n\n\n\n
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The Australian Energy Regulator<\/a> recently announced its Default Market Offer<\/a> (the \u201cprice cap\u201d 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.\u201d\u00a0\u00a0<\/p>\n\n\n\n
At Origin we set our rates taking into account a number of factors, including what\u2019s going on in the wider energy market. Learn more about market VS standing rates<\/a> and your rights as an energy consumer<\/a>. <\/p>\n\n\n\nWe’ll let you know if your prices are changing<\/h2>\n\n\n\n
What goes into an average Australian energy bill*<\/h2>\n\n\n\n
Environmental costs (8%<\/a>)<\/h3>\n\n\n\n
Network costs (50%<\/a>)<\/h3>\n\n\n\n
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Retail costs (12%<\/a>)<\/h3>\n\n\n\n
Wholesale costs (30%<\/a>)<\/h3>\n\n\n\n
How to check you’re on the best plan for your household<\/h2>\n\n\n\n
2.<\/strong> Now you\u2019re going to want to check not only the % comparison to the Default Market Offer (if you\u2019re in NSW) or the Victorian Default Offer (if you\u2019re in VIC), but also the usage and supply charges (including peak and off-peak if you\u2019re on a time-of-use tariff).
3.<\/strong> If crunching numbers isn\u2019t your thing, there are a few government websites that make it easier including Energy Made Easy<\/a> (if you’re in NSW, SA, QLD or the ACT) or Victorian Energy Compare<\/a> (if you’re in VIC). <\/strong>Just make sure you have your rates, or bills, handy so you can enter your details into the calculators.
4. <\/strong>You\u2019ll also want to consider things like how easy it is to get in contact with your provider (do they offer a mobile app<\/a> or can you email them instead<\/a> of having to call?), what payment options<\/a> they offer and whether they offer benefits for bundling additional services<\/a> or green options<\/a>.<\/p>\n\n\n\nHelpful ways to reduce your energy bills<\/h2>\n\n\n\n
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Help is available<\/h2>\n\n\n\n