ReAmped and Electricity in a Box. Who is next?
Is there an Energy Crisis? Or are Prices just Going Up?
We explain why these electricity companies suddenly want you to leave, and what you should do now. Other companies might follow, so read on. Read on to learn how to survive this energy crisis and keep your cost of living as low as possible.
Electricity prices have 3 components: network charges, wholesale energy costs and other costs including retail costs and margins and environmental charges.
Wholesale Energy Crisis
Wholesale costs, which are typically about 1/3 of your bill have increased quite dramatically. These increases commenced before the war in Ukraine but the increases have been turbocharged by the war and the unplanned outages of coal generation. 25-30% of coal fired generation is out of service. Gas prices have also doubled which affects gas customers and electricity prices in all States. Black Coal prices are the main driver of electricity price rises in QLD and NSW where it is the main form of generation. Black coal is not used in Vic and SA so they are less affected.
How do Energy Companies manage costs?
There are two components to Wholesale prices. The spot market which is highly volatile and the contract market which Energy Suppliers use to fix the price. Energy Companies can be caught short if they don’t fix the price with contracts. They can end up selling to customers below the new higher wholesale price.
The default market offers
Energy companies must offer a plan at the price set annually by the regulators. Some Energy Companies are being squeezed by the Default Offer despite it being increased by 5-20% depending on the State. Unless something changes, more energy companies are likely to fail as they are being required to sell below their costs.
What are Energy Companies doing?
Well run Companies will be increasing their prices for new customers and gradually increasing prices for existing customers.
If your supplier asks you to look elsewhere for supply, you will know that they haven’t managed risks properly. Unfortunately there’s no way to know in advance about this, but don’t worry you have gained the benefit of the low prices while it lasted. Now it’s time to look elsewhere.
You can expect your prices to go up, but the increase should be reasonable i.e. in the range 5-20%. But most people who are not using Energy Umpire are paying 20-30% too much anyway.
What should I do?
If your supplier asks you to look elsewhere for supply, you can sit on your hands and wait for the actual price increase notification. Your energy supplier cannot increase prices without giving you notice. If the price increase is large you can ask for the Victorian default offer (VDO) or in NSW, QLD and SA the default market offer (DMO) and they must give it to you. There is no need for panic. The energy company that asks you to leave is trying to panic you to reduce their exposure to increased wholesale prices.
There is no need to panic even if your supplier goes bankrupt. The Retailer of Last Resort for your area (normally AGL, Origin or EnergyAustralia) takes over your account at the default market price. You can then switch to your chosen supplier. There will be no interruption of supply.
How we will Support You and make sure it’s not your Energy Crisis
Complete plan customers
It’s simple, we will make sure you get switched to the best plan all the time! If you are on our Complete Plan, sit tight, we’ll send you the best plan advice soon. If you’re worried just send us a note.
Basic plan customers
Customers on our Basic plan should consider switching to our Complete plan where you get your bills and price change notification analysed and specific email support. To support your shift to the complete plan let us know, we will upgrade your basic subscription to Complete for half price for the first year $30 per account. Email your bills to us at email@example.com. If you remain with our basic plan you will still get monthly best plan advice. If that meets your needs, sit tight.
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