The ACCC’s latest electricity report shows that median effective prices for residential customers across all regions grew by 14 per cent between September 2022 and September 2023.

Prices increased as a result of the continued effects of the energy market events in 2022. However, increases were largely offset by lower electricity usage due to Australia experiencing its warmest winter on record in 2023. This led to lower usage which meant household electricity bills remained relatively steady (rising 1 per cent) and small business bills decreased by 9 per cent in September 2023.

Government rebates also helped to offset the impact of price increases on customer bills. The report found residential electricity bills in the September 2023 quarter would have been 14 per cent higher without government rebates. South East Queensland residents experienced the greatest offset in their electricity bill, with an average saving of $176 per bill, as almost all customers in the region were eligible for a rebate.

“While electricity bills were relatively stable in the year to September 2023, this was largely due to an unusually mild winter as well as the presence of government rebates. A return to more normal weather conditions may result in consumers receiving higher bills this year as their levels of consumption increase,” ACCC Commissioner Anna Brakey said.

Claims for financial hardship support increase

From September 2022 to September 2023, there was a 18 per cent increase in the number of consumers applying for financial hardship support from their electricity retailer.

The report found that residential customers on a payment plan or hardship program typically used more electricity and so had higher bills than other residential customers.

“With electricity prices expected to increase this year, we encourage consumers that are under financial stress to contact their electricity provider and let them know. Electricity retailers are required to assist you if you are experiencing financial hardship,” Ms Brakey said.

“As Australians face cost of living pressures, we encourage consumers to regularly check with their current retailer, other retailers, or government comparison websites to ensure they are on the best electricity plan available. The evidence tells us that customers who change electricity plans, even if it’s with their existing retailer, pay less.”

Time-of-use and demand plans become more common

Customers are increasingly being moved from flat-rate plans (where usage charges are the same at all times of the day) to time-of-use plans (where usage charges change at different times of the day) and demand plans (where bills have an extra ‘demand charge’ calculated on the maximum usage at a single point in time, on top of underlying usage and supply charges). 

These types of plans aim to provide incentives to customers to shift their consumption to periods when electricity is cheaper to supply. Retailers typically move a customer onto these plans to align with the tariff changes they face at the network level, usually following the installation of a smart meter at a customer’s premises.

The report found that time of use and demand plans were most common in South Australia and South East Queensland, where 27 per cent and 14 per cent of customers, respectively, were on one of these types of plans in the 2022-23 financial year.

The report also found that customers on time-of-use and demand plans generally pay similar prices to those on flat-rate plans. However, to ensure customers do not pay more on the new plans, retailers need to make sure that their customers know about, and understand, the new pricing structure and customers then need to be able to respond to those pricing structures.

“Retailers must notify their customers if they intend to move them from a flat rate plan to a time-of-use or demand plan and explain what impact this may have on their bills,” Ms Brakey said.

“If a customer is not aware of this change, then they cannot adjust their electricity consumption accordingly and may face higher bills unknowingly.”

Greater transparency required over prices for the supply of essential services to apartment buildings

For the first time, the report includes additional data on electricity bills for the growing number of Australians living in apartments and other multi-dwelling properties that are served by embedded (or private) networks.

It found that many Australians living in an apartment face less choice when it comes to selecting an electricity provider and often have difficulty changing providers.

Embedded networks are private networks that allow a single seller to provide essential services, such as electricity, to multiple occupants at a single site. These networks may be operated by the site owner through a body corporate, by a dedicated embedded network operator or by an energy retailer.

The number of embedded networks in the National Electricity Market has grown substantially in recent years.

“We are concerned that the growing number of embedded network customers do not have access to the same level of competition and choice for electricity providers as those living in free standing homes do,” Ms Brakey said.

“Given the nature of embedded networks, customers living in apartments have very few options when trying to switch retailers and often have no choice but to stay with one provider.”

The report found that while the median effective price was lower for embedded network customers than regular customers, some embedded network customers paid the same or higher prices than the median regular customer, but with fewer or no options to choose a better deal.

While embedded network customers generally experience lower network costs per customer, prices within embedded networks may rise further as electricity networks update their pricing structures to increase network tariffs for embedded networks.

Most residential embedded network customers are also separately billed for additional services, many of which are energy intensive, such as hot water, heating and cooling.

“There is currently no information on how much customers within embedded networks pay for these additional services, and we are concerned that customers paying for multiple services may end up having substantially higher overall bills for essential services than other customers.”

“With the growth of embedded networks, we need greater transparency of this market to understand consumer outcomes and enable better informed policy in this emerging sector,” Ms Brakey said.

Background

This report captures some of the longer-term impacts of the volatility in the wholesale electricity market experienced in mid-2022 and examines the billing amounts and effective prices (price per unit of electricity used) faced by residential and small business electricity consumers across New South Wales, South Australia, South East Queensland and Victoria.

To inform this report, the ACCC has collected 15 million electricity bills for regular customers, from 8 retailers in New South Wales, Victoria, South East Queensland, and South Australia. This data set contains information on charges, plan types, usage, discounts and solar.

In addition, for the first time the ACCC has collected data on embedded networks from 8 retailers, with the additional dataset of 3 million electricity bills covering the vast majority of those embedded networks served by authorised retailers. Both datasets cover the period of July 2022 to September 2023.

In 2018, the Australian Government directed the ACCC to hold an inquiry into the prices, profits and margins in relation to the supply of electricity in the National Electricity Market. This is the eleventh time the ACCC has reported as part of this inquiry.

The ACCC is also responsible for monitoring compliance with the provisions introduced by the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Act 2019, which is to ensure that any sustained and substantial reductions in retailers’ input costs are passed on to consumers, as well as provisions prohibiting specific conduct in the spot market and hedging contract market.

The report is available on the ACCC’s website at Electricity market monitoring 2018-2025.

The ACCC is required to report at least every 6 months. The next report is scheduled for December 2024.