The Soaring Costs of Electricity in Australia: A Financial Crisis for Homeowners and Businesses

Electricity prices have been increasing rapidly all across Australia with the average homeowner feeling the pinch. For those living in the country, the rapid rise in power costs has put a noticeable dent in the household budget. In an unprecedented confluence of events, the impact on the energy industry and subsequent price increases have created financial crises for many home and business owners alike. 

Areas like Queensland and New South Wales have been faced with energy bills that have already risen by 12% to 18%. But the price hikes don't stop there. Local news reports an impending 35% jump in electricity prices as wholesale electricity costs are also rising. 

There are several contributing factors that are driving the energy hikes such as:

• Russia - Ukraine ward

• Unplanned energy plant outages

• Inflation

• Increased network costs

• Retailers trying to make more profit for their owners & investors

Wholesale gas and electricity prices have increased by 200% in 2022 when compared with the previous year and gas prices have risen by approximately 250%, for the average homeowner which can equate to bills as high as $180-$260 a month higher. This increase has sent many property owners scrambling to find energy savings through home improvements and cheaper energy providers. 

It is not just homeowners who have been affected by the current economic climate, some energy retailers have been unable to cope with the soaring energy and operational costs and forced to close down operations. Companies like Social Energy shut their doors earlier this year, and their customers were passed over to an alternate energy retailer to maintain their current service. 

Elysian energy has been the most recent energy cost casualty and their authorisation to trade was halted in September, affecting approximately 2500 customers in Queensland, NSW, Victoria, Tasmania, and South Australia – these customers will be transferred to other retailers. While this short-term strategy is to keep customers supplied with their important energy services, it can worsen the crises overall for retail customers as they have to deal with unknown plans and higher pricing from the new providers. 

Compounding the already difficult situation, inflation is putting even more pressure on the people of Australia. As the cost of living rises and interest rates creep higher, the prices of essentials like food and supplies are steadily climbing, leaving consumers digging even deeper into their already stretched cash reserves. 

Food products like fruit, meat, and vegetables cost more and the increase in gas prices has caused huge disruptions to the supply chain. Inflation has peaked at 7%, and with so much uncertainty around the country’s economy, the worst may not yet be over. The prices of services are rising and the higher cost of borrowing will see reduced spending on luxury or non-essential items and a slowdown in major purchases like new cars or home purchases. 

Australia is not the only country impacted, as the rise in energy is a problem that has unfolded on a global scale, with the majority of countries also experiencing high increases. With the sanctions imposed on Russian exports and the subsequent invasion of Ukraine, energy costs have spiralled out of control.

Even though Australia is half a world away from the ongoing war, the ramifications are still felt with the costs of gas, oil, and coal and the global refusals to trade with Russia that are driving the price spike. Russia is the third biggest coal exporter in the world, and buyers are protecting their supplies in the event that sanctions will remain in place throughout the conflict in Ukraine. 

In the face of this disastrous situation, it is likely the Australian government will increase their renewable energy efforts with higher investment in solar and wind energy to make the most use of sustainable resources. While this will do little to alleviate the current state of affairs, it may be smart planning to future-proof the country from similar situations and protect its people and economy from another energy crisis. 

We are all in this together, so any energy price reductions or even price stalls such as locked-in energy rates for up to 5 years can be a bonus and something that could really help many of our customers.  If you want to chat about your current situation and see how you can access cheaper energy bills in this chaotic world we find ourselves living in, then please give us a call sometime to chat things through.

Related Topic : 4 Home Energy Saving Tips & Tricks