Finance Finance News Australians rush to switch retailers as electricity prices skyrocket
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Australians rush to switch retailers as electricity prices skyrocket

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A record number of Australian households switched energy providers in June as soaring electricity prices shut down retailers and forced thousands of people onto more expensive deals.

Figures published by the Australian Energy Market Operator (AEMO) on Friday show 240,846 households moved retailers last month – the highest number ever recorded in June and the highest since April 2021.

It came as wholesale power costs soared an extraordinary 203 per cent, to $264 per megawatt hour (MWh), in the June quarter – six times higher than long-term averages.

Joel Gibson, money-saving expert at comparison firm One Big Switch, said most Australians are changing retailers to avoid huge spikes in their power bills, with the worst of the price hikes set to come next week.

About 5.5 million households will see their power bills soar on August 1 as large retailers – including AGL, Origin Energy and EnergyAustralia – pass on massive price hikes, he said.

“This is when the rubber hits the road,” Mr Gibson said.

“Monday is the biggest day for electricity price hikes we’ve seen this year.”

‘Urgent’ need for reform

In a report on Friday, AEMO said high global commodity prices, outages of coal-fired power stations and an increased reliance on pricey gas-fired power drove wholesale prices to record highs over the June quarter.

Prices jumped $177/Mwh over the quarter and $179/MWh over the year.

AEMO executive general manager Violette Mouchaileh said the report shows Australia’s electricity system is in need of urgent reform as the nation heads towards net-zero emissions.

“What’s clear is the urgent need to build out renewable energy with diversified firming generation – like batteries, hydro and gas – and transmission investment to provide homes and businesses with low-cost, reliable energy,” she said.

The higher wholesale prices are also now filtering through to consumers as retailers either collapse under the pressure of the ongoing energy crisis or pass on the massive price increases.

Upcoming price hikes include a 17.5 per cent increase for AGL customers in New South Wales and an 18.9 per cent rise for households using EnergyAustralia in Southeast Queensland – effective from next Monday.

Time to shop around

Households facing higher bills are being urged to seek cheaper deals quickly, because many won’t have to pay their next bill until after winter.

Mr Gibson said switching before the cold weather ends could save you hundreds of dollars.

“Whether your retailer is hiking prices by 5 per cent or 100 per cent – everybody should take a look at what’s out there right now,” he said.

“The whole market has just reset – it’s a good time for everyone to check if their plan is a dud.”

Households who were with energy providers that collapsed during the energy crisis in July – including Enova Energy, Pooled Energy, Weston Power and Power Club – should be particularly vigilant.

That’s because they will have been automatically moved onto the ‘retailer of last resort plan’ – a scheme established to ensure the continued supply of electricity to homes when an energy retailer goes out of business.

“You will be moved onto a dud deal because they put you onto the standing tariff, which is equal to the government reference price,” Mr Gibson said.

“The new retailer will contact you, but it could take up to five weeks.”

Online guides to the best deals

Finding the best deals on the market is remarkably easy.

Households in Victoria can even earn $250 from the government for doing so.

The best places to find the lowest prices are government-run comparison websites.

These are the federal Energy Made Easy tool and Victoria’s Compare Energy site. Each can provide tailored information in just a few minutes on the best deals available.

Mr Gibson said larger retailers have generally weathered the energy crisis better than smaller ones, resulting in lower prices for consumers.

“The best deals from the big retailers are mostly 5 per cent to 10 per cent below the government reference price range,” he said.

“That can save you hundreds of dollars.”

Make sure you have a copy of a recent bill at hand when you visit one of the government comparison websites.

You’ll also need the details of your smart meter status and information about any controlled-load appliances in your home.