Energy prices are set to rise by up to 9% in NSW, South Australia, and South East Queensland, under recommendations from the energy market regulator.
The increases are due to affect both households and businesses.
Chair of the Australian Energy Regulator (AER) Claire Savage said “cost pressures” have impacted every part of the network.
The Federal Government is now facing questions over whether it will continue energy bill discounts at the upcoming budget on 25 March.
DMO
To protect the public from exorbitant prices, the AER sets a “default market offer” (DMO), also called a ‘safety net’.
This is the maximum amount energy companies can charge you on a standard account. It is updated once a year based on conditions in the energy market.
The DMO applies to NSW, South East Queensland, and South Australia, and is valid for one financial year (1 July – 30 June). Power companies in the rest of the country use the DMO as a reference for what they should charge.
Decision
The AER typically announces a draft DMO two months before it officially comes into effect.
It released the draft DMO for the 2025/26 on Thursday.
The AER has suggested a 2.5 to 8.9% increase for households and a 4.2 to 8.2% increase for small businesses.
The figure varies based on location across South East Queensland, NSW, and SA.
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The AER says it needs to set energy prices so that power companies can make a “reasonable profit when supplying electricity”.
It pointed to factors driving up power prices across Australia, including “high demand, coal generator and network outages, and low solar and wind output”.
Savage said the AER was aware it’s a “challenging” time for Australians.
“We know that cost-of-living pressures are front of mind for many households and small businesses.”
Govt response
Energy Minister Chris Bowen urged people to check they’re on the cheapest energy plan possible. Bowen pointed to a finding by the Australian Competition and Consumer Commission that more than 80% of people could pay less.
Last year, the Government brought in a $300 energy bill discount for households, applied across the financial year.
When asked whether the discount would be extended at the upcoming budget, Bowen told media: “We will always consider what more can be done”.
Coalition
Liberal MP Zoe McKenzie told Sky News that even if the Government continued its energy bill discount for another year, it would be “sucked up out of the blue almost immediately” due to rising energy costs identified by the AER.
The Coalition’s central energy policy is to set up seven nuclear reactors across Australia over the next few decades.
McKenzie said meeting energy demand is “going to take more gas and it's going to take nuclear.”
