The last couple of years has been nothing short of eventful in the Australian energy industry. We’ve seen it all – from Russian gas sanctions and global supply chain hurdles to a sluggish National Energy Market and government interventions on the home front. As your trusted energy retailer, let us help you take a closer look at the energy landscape thus far and shed some light on the reasons for the surge in energy costs and what lies ahead for Aussie’s energy bills in 2023.
What to Expect on Your Next Energy Bills
July is here and the increase in energy bills is already in place with your upcoming bills. Brace yourselves, as some states might be hit with price hikes of up to 25%. The Australian Energy Regulator (AER) has recently made a decision regarding the default market offers that set the pricing foundation for retailers. According to their ruling, New South Wales, South Australia, and Southeast Queensland can expect prices to rise between 19.6% and 24.9%.
Furthermore, the Essential Services Commission (Victoria’s government energy regulator) announced that the Victorian Default Offer (the benchmark price for electricity in VIC) would rise by 25% starting July 1, 2023, mainly due to the significant increases in wholesale electricity costs driven by market volatility last year. However, the AER is quick to point out that these increases are only about half of what could have transpired without government intervention. Luckily, in December 2022, the federal government stepped in to cap domestic gas and black coal prices, preventing even steeper hikes.
What Are the Reasons for the Surge in Energy Costs
Now, let’s dive into the complex factors behind these price hikes. Rising wholesale electricity and gas prices, inflationary pressures, and the volatile nature of the global energy market contribute to this situation. Let’s take a closer look at these factors that are driving up electricity and gas prices in Australia.
1. Environmental Policy Adjustments
Changes in environmental policies have had an impact on wholesale energy costs, which, in turn, have played a part in the rise of electricity and gas prices.
2. Privatisation of State Government-Owned Electricity Networks
The ongoing privatisation of state government-owned electricity networks has also contributed to the increase in energy prices. This transition to private ownership can have implications on pricing structures.
3. Coal-Fired Power Station Outages
Outages at coal-fired power stations have caused an increased reliance on gas, which, in turn, has driven up both wholesale electricity and gas prices. These unforeseen disruptions have put additional pressure on the market.
4. Spiking Commodity Prices
Global events, such as the war in Ukraine, have resulted in spiking commodity prices. These price increases have had a direct impact on wholesale electricity and gas costs in Australia.
5. Development of Renewable Energy
While not an immediate solution, the ongoing development of renewable energy, including the establishment of Renewable Energy Zones (REZ) and related grid projects, holds promise for reducing dependence on fossil fuels and potentially lowering energy prices in the long term.
6. Supply Chain Constraints and Interconnection Bottlenecks
As demand continues to grow in 2023, supply chain constraints and interconnection bottlenecks may become more pronounced. These challenges can exacerbate price pressures and extend project timelines, further impacting energy prices.
How CovaU Energy Can Help You
At CovaU Energy, we recognize the complexities and challenges within the energy market. Our team is committed to navigating these factors while offering our customers the best possible pricing options and energy solutions. As announced on our signup page, we will also be implementing a price adjustment in our energy plans for electricity and gas.
See a detailed breakdown of the additional fees in your energy bill.
This decision was not taken lightly, as we understand the impact it may have on your budget. However, due to rising operational costs and various factors in the energy market, we find it necessary to make this adjustment to ensure the continued reliability and quality of our services. We value the trust you have placed in us as your energy provider, and we remain committed to offering competitive rates while delivering exceptional customer service. Despite this price adjustment, we want to assure you that our commitment to delivering reliable, efficient, and sustainable energy solutions remains unwavering.
There are various state government concessions and rebates available to help you pay your energy bills. Eligibility and application for these rebates, varies between states, please choose the state that is relevant to you.
Recently, CovaU Energy also became a signatory for Energy Charter’s Knock to Stay Connected Customer Code. Through this program, we encourage you to reach out to our 24/7 customer service agents to make arrangements to avoid being disconnected.
Here at CovaU Energy, we hope that with the help of these concessions, rebates, and customer-centred programs, we can somehow lighten the burden of this inevitable price surge. For more information about our electricity and gas plans, you may call 1300 111 688 to talk to our energy specialists or request a quote for the rates in your area.
