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What you can do about rising energy prices

What you can do about rising energy prices

With higher power prices on the horizon and the threat of power shortages dominating the news, millions of Australian households may be wondering how they can prepare for rising energy prices.

From the start of the new financial year, residents in New South Wales and Queensland will be preparing to pay 18% and 12% more for their power respectively.

The Australian Energy Regulator approved power price increases for both NSW and Qld residents from July 1 off the back of global commodity prices, the war in Ukraine and unplanned outages of coal-fired power stations.

AER chairwoman Clare Savage said the pressures on the wholesale market “would not go away anytime soon”.

“There are certainly some longer-term price pressures in the wholesale market. When you don’t have the generation capacity available, we are seeing quite significantly higher prices,” said Ms Savage

Power shortages on the horizon

Not only are prices on the up due to the aforementioned reasons, but supply is being significantly impacted by the recent cold snap in the Eastern States. This has led regulators to introduce price controls to wholesale electricity prices for the first time.

Last night, the cumulative price threshold (CTP) trigger was hit in New South Wales after the state’s wholesale price hit the maximum of $15,100 per megawatt-hour. Queensland narrowly missed a critical electricity supply shortfall as well.

And today, Victoria and South Australia have joined Queensland and New South Wales having controlled prices set for wholesale electricity.

Electricity generators are also struggling to cover the cost of runaway wholesale prices through trading positions taken in the National Electricity Market and the Australian Securities Exchange. This may potentially result in a cash crunch which could force government bodies to pay out power providers to prevent closures.

In a challenging time for both the supply and demand of electricity across Australia, homeowners may be wondering what options they have for reducing their costly energy bill this winter, and beyond.

How to prepare your budget for rising energy prices

According to the Department of Industry, Science, Energy and Resources, the best place to start is by “understanding how much energy you use each day (and when), as well as which energy saving actions will have the biggest impact in your home”. This includes:

  • ”The size and features of your home
  • The energy efficiency of your appliances
  • Your lifestyle and the times of day you use most power at home
  • The way you manage and use the equipment around your home
  • Your choice of energy retailer and energy contract”

Here are some options worth considering if you’re worried about rising energy prices:

  • Compare your consumption

Look at a few energy bills, such as one from the same period last year, and take note of any patterns you notice. Are you using more energy in winter because your house is colder? This may be indicative of a need for upgrades, such as sealing gaps (particularly in older houses) or adding double-glazed windows.

  • Change your patterns

Is there a time of the day where you use more energy? If your family uses more energy after school and work for leisure time, it may be worth considering how you can make this time more energy efficient, such as ensuring lights are off in rooms not being used. Research when your off-peak times are and consider using your bigger, energy-usage appliances then, such as your washing machine or dishwasher.

  • Compare retailers and plans

If you live in a home that offers you the option of comparing your energy retailer, it may be worth using comparison tools to ensure you’re on the contract that best suits your needs and budget.

The Australian government provides tools, such as the Energy Made Easy website, to allow households and small businesses to easily compare retailers for electricity and gas. It is suitable for New South Wales, Queensland, South Australia, Tasmania, and the Australian Capital Territory.

For Victoria, consider using Victorian Energy Compare, for the Northern Territory, refer to the Power and Water for more detailed information, and for Western Australia, the Economic Regulation Authority may also offer some insight for your comparison.

  • Ask for a discount

They say if you don’t ask you don’t get, and the same is true for your energy bills. It may be worth calling up your provider and asking for a discount. Advise them that you’ve done your research from the Australian government website for your state or territory and you’re considering switching to a better-suited retailer. Ask your current provider if they can offer you a discount so you will stay. You’d be surprised at what a retailer may be willing to offer you to keep you as a customer.

  • Energy efficient appliances

Take stock of your appliances, like your refrigerator, dishwasher, television, heater etc. and consider making all your appliances energy efficient. If your appliances are very old they're probably not as efficient with their energy usage. You may find that you save more on your energy bills by getting newer ones.

Keep your eyes on Facebook marketplace, eBay and Gumtree. People often sell large appliances when moving out of their home, and if you can get access to a Ute or truck, you could nab a great deal on a second-hand appliance.

  • Government assistance

Your state or territory may offer assistance payments if you’re struggling to pay your utilities bills. For example, New South Wales offers Energy Accounts Payment Assistance vouchers for those struggling to pay household bills. Eligibility criteria does apply, so read the terms and conditions before you consider applying.

  • Switch to solar

If you are in the financial position to consider installing solar panels and their infrastructure, it may be worth exploring this as an option. While solar panels are considered a large upfront expense, it is suggested that the money you could save on your energy bills by generating your own power may cover these costs in the long run. And, with energy bills tipped to continue to rise, you may break even sooner than you expect

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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