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News.com.au
3 days ago
- Business
- News.com.au
‘Could be so much simpler': Energy Minister Chris Bowen announces energy price cap overhaul
Energy Minister Chris Bowen has announced a raft of proposed reforms designed to save Australian households from soaring power prices. Speaking at Australian Energy Week in Melbourne on Wednesday, Mr Bowen said reform to the way the energy price cap mechanism worked outside of Victoria was needed in order to make price caps effective. 'Currently, the independent Australian Energy Regulator (AER) sets the default market offer (DMO) as a benchmark for residential and small business electricity bills in NSW, South East Queensland and South Australia, while here the Victorian default offer is set by the Essential Services Commission,' he said. 'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging while leaving the job of putting downward pressure on prices to competition. 'However, I'll be frank. I don't think it's working that way and reform is needed.' Mr Bowen said the vast majority of bill payers, 'some 80 per cent', could be getting a better deal. 'It's difficult to defend the DMO when the customer is required to do the deal hunting,' he said. 'We know it could be so much simpler.' Mr Bowen announced that in 2026 the federal government would be delivering a 'reformed pricing mechanism' designed 'to get the best deal for consumers and act as the maximum price retailers can charge for standing offers in DMO regions'. 'The reformed pricing mechanism will bring DMO states closer in line with other jurisdictions like here in Victoria, which this year has seen significantly smaller bill increases compared to DMO regions,' he said. The Victorian default offer (VDO) rose by less than 1 per cent in 2024–25, while the DMO varied much more widely; in NSW some residential customers experienced a decrease of about 1 per cent, while in South East Queensland prices increased by about 4 per cent. The announcement has drawn criticism from energy providers who say they're surviving on razor-thin profit margins as it is and the planned overhaul could put small energy providers out of business. One of Australia's biggest energy providers AGL issued a statement in response, saying it would look forward to engaging with the government on the review but 'to reduce energy bills, we need to look at the whole picture'. 'The government and industry are actively working on measures to reduce wholesale electricity costs. At 40 per cent of an average bill, network costs are a big component of bills and are continuing to grow quickly,' the statement read. 'A focus on improving network productivity is essential to keep these costs in check. Retail costs only represent around 10 per cent of an average bill and we need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate.'
West Australian
3 days ago
- Business
- West Australian
‘Could be so much simpler': Energy Minister Chris Bowen announces energy price cap overhaul
Energy Minister Chris Bowen has announced a raft of proposed reforms designed to save Australian households from soaring power prices. Speaking at Australian Energy Week in Melbourne on Wednesday, Mr Bowen said reform to the way the energy price cap mechanism worked outside of Victoria was needed in order to make price caps effective. 'Currently, the independent Australian Energy Regulator (AER) sets the default market offer (DMO) as a benchmark for residential and small business electricity bills in NSW, South East Queensland and South Australia, while here the Victorian default offer is set by the Essential Services Commission,' he said. 'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging while leaving the job of putting downward pressure on prices to competition. 'However, I'll be frank. I don't think it's working that way and reform is needed.' Mr Bowen said the vast majority of bill payers, 'some 80 per cent', could be getting a better deal. 'It's difficult to defend the DMO when the customer is required to do the deal hunting,' he said. 'We know it could be so much simpler.' Mr Bowen announced that in 2026 the federal government would be delivering a 'reformed pricing mechanism' designed 'to get the best deal for consumers and act as the maximum price retailers can charge for standing offers in DMO regions'. 'The reformed pricing mechanism will bring DMO states closer in line with other jurisdictions like here in Victoria, which this year has seen significantly smaller bill increases compared to DMO regions,' he said. The Victorian default offer (VDO) rose by less than 1 per cent in 2024–25, while the DMO varied much more widely; in NSW some residential customers experienced a decrease of about 1 per cent, while in South East Queensland prices increased by about 4 per cent. The announcement has drawn criticism from energy providers who say they're surviving on razor-thin profit margins as it is and the planned overhaul could put small energy providers out of business. One of Australia's biggest energy providers AGL issued a statement in response, saying it would look forward to engaging with the government on the review but 'to reduce energy bills, we need to look at the whole picture'. 'The government and industry are actively working on measures to reduce wholesale electricity costs. At 40 per cent of an average bill, network costs are a big component of bills and are continuing to grow quickly,' the statement read. 'A focus on improving network productivity is essential to keep these costs in check. Retail costs only represent around 10 per cent of an average bill and we need to carefully consider any moves that could lessen competition in the retail market, particularly if smaller retailers were no longer able to operate.'
West Australian
4 days ago
- Business
- West Australian
Energy minister plugs in for power price cap reforms
Caps designed to protect power users from excessive price hikes are not working as intended and need refining, the federal energy minister will concede in his first major speech since the election. A convincing Labor win also has Chris Bowen hopeful Australia can triumph in its bid to co-host global climate talks and muscle out competitor Turkey, with a decision expected soon. In a wide-ranging address to the Australian Energy Week conference in Melbourne, Mr Bowen will promise changes to the so-called Default Market Offer rules to force retailers to compete harder for customer dollars. "The DMO was intended to act as a benchmark price to stop the worst forms of price gouging, while leaving the job of putting downward pressure on prices to competition between energy companies," he will say on Wednesday. "However, I'll be frank. I don't think it's working that way and reform is needed." In several states, regulators enforce caps on what retailers can charge households and businesses to protect the hundreds of thousands of customers unable or uninterested in chasing a better deal. Caps are reviewed annually to reflect the costs of generation and moving electricity around through poles and wires. In NSW, South Australia, southeast Queensland, it's the independent Australian Energy Regulator's job, while in Victoria, the Essential Services Commission sets benchmark prices. Changes to AER's price cap mechanism have not yet been locked in, but could include clamping down on what retailers can claim back from customers on their bills. Mr Bowen said it was hard to defend price caps when 80 per cent of billpayers could be getting a better deal. "That's why we have work underway to deliver a better regulated pricing mechanism which will put downward pressure on electricity bills and also ensure the energy market better utilises the huge uptake of rooftop solar and batteries," he will say. Mr Bowen will declare Labor's thumping election win as a vote of confidence in its energy and decarbonisation policies. He says it puts Australia in a strong position to secure the rights to co-host the COP31 climate talks alongside Pacific nations. An announcement is possible at the UN climate meetings underway in Bonn, Germany. The bid has come under pressure following the federal government's proposed decision to grant an extension on the North West Shelf gas plant's operating life. The project was singled out by Oil Change International in a report showing the United States, Canada, Norway, and Australia are responsible for nearly 70 per cent of projected new oil and gas from 2025 to 2035.
Perth Now
4 days ago
- Business
- Perth Now
Energy minister plugs in for power price cap reforms
Caps designed to protect power users from excessive price hikes are not working as intended and need refining, the federal energy minister will concede in his first major speech since the election. A convincing Labor win also has Chris Bowen hopeful Australia can triumph in its bid to co-host global climate talks and muscle out competitor Turkey, with a decision expected soon. In a wide-ranging address to the Australian Energy Week conference in Melbourne, Mr Bowen will promise changes to the so-called Default Market Offer rules to force retailers to compete harder for customer dollars. "The DMO was intended to act as a benchmark price to stop the worst forms of price gouging, while leaving the job of putting downward pressure on prices to competition between energy companies," he will say on Wednesday. "However, I'll be frank. I don't think it's working that way and reform is needed." In several states, regulators enforce caps on what retailers can charge households and businesses to protect the hundreds of thousands of customers unable or uninterested in chasing a better deal. Caps are reviewed annually to reflect the costs of generation and moving electricity around through poles and wires. In NSW, South Australia, southeast Queensland, it's the independent Australian Energy Regulator's job, while in Victoria, the Essential Services Commission sets benchmark prices. Changes to AER's price cap mechanism have not yet been locked in, but could include clamping down on what retailers can claim back from customers on their bills. Mr Bowen said it was hard to defend price caps when 80 per cent of billpayers could be getting a better deal. "That's why we have work underway to deliver a better regulated pricing mechanism which will put downward pressure on electricity bills and also ensure the energy market better utilises the huge uptake of rooftop solar and batteries," he will say. Mr Bowen will declare Labor's thumping election win as a vote of confidence in its energy and decarbonisation policies. He says it puts Australia in a strong position to secure the rights to co-host the COP31 climate talks alongside Pacific nations. An announcement is possible at the UN climate meetings underway in Bonn, Germany. The bid has come under pressure following the federal government's proposed decision to grant an extension on the North West Shelf gas plant's operating life. The project was singled out by Oil Change International in a report showing the United States, Canada, Norway, and Australia are responsible for nearly 70 per cent of projected new oil and gas from 2025 to 2035.
The Guardian
4 days ago
- Business
- The Guardian
Australians could be spared excessive power bills as Labor looks to stamp out price gouging
Households could be spared unreasonable power bill rises in the future as the Albanese government looks to stamp out price gouging after repeated price hikes. In an address to the Australian Energy Week on Wednesday, Chris Bowen is expected to announce a review of the default market offer (DMO), which sets a benchmark price for residential and small business electricity bills. The benchmark places a guide on what retailers can charge households and businesses in New South Wales, South Australia, south-east Queensland and Victoria, with consumers encouraged to use it to shop around for better electricity deals. Bowen will acknowledge the DMO's role in preventing egregious price gouging and encouraging competitive prices but will concede it has not worked as well as intended. The DMO is set by the Australian Energy Regulator (AER) in NSW, South Australia and Queensland and by the Essential Services Commission in Victoria. Sign up for Guardian Australia's breaking news email Some NSW customers will face the highest increase in electricity bills from July, expected to be between 8.3% to 9.7%. South-east Queenslanders will be hit with rises between 0.5% and 3.7% and for South Australians rises are expected to be between 2.3% and 3.2%. Victorians, on the other hand, are expected to see an average 1% bump in bills with some consumers in line for a price drop, according to the Essential Services Commission. Bowen is expected to point to Victoria's model as a goal, noting it has significantly smaller bill increases compared to other DMO regions. 'The DMO was intended to act as a benchmark price to stop the worst forms of price gouging, while leaving the job of putting downward pressure on prices to competition between energy companies,' the energy minister will say. 'However, I'll be frank. I don't think it's working that way and reform is needed.' The potential changes to the AER's DMO mechanism could include removing the competition allowance as well as putting further restraints on what retailers can claim back from customers in their bills, Bowen will say. 'The vast majority of billpayers, some 80%, could be getting a better deal. It's difficult to defend the DMO, when the customer is required to do the deal hunting,' he will say. Sign up to Afternoon Update Our Australian afternoon update breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion 'That's why we have work underway to deliver a better regulated pricing mechanism which will put downward pressure on electricity bills and also ensure the energy market better utilises the huge uptake of rooftop solar and batteries.' The competition allowance, or the costs to acquire and retain customers (CARC), is factored into the DMO benchmark to acknowledge retailers' business costs. The AER has already excluded the allowance from the 2025-26 DMO to provide consumers with a small amount of cost-of-living relief. Bowen will also use his address to discuss the $2.3bn plan to subsidise small household batteries for solar power. The energy minister will reveal plans to convene an industry advisory committee in the coming weeks as battery sales outpace new solar systems. Under the scheme, which comes into effect from 1 July, the cost of household batteries will be slashed by 30% for those with existing solar systems or looking to buy one. It's expected to cut the cost of a typical household battery by about $4,000, or 30%, and government analysis shows it could save households up to $2,300 a year, equivalent to 90% of a typical family's electricity bill.
