What’s Really Behind High Power Bills (Hint: It’s Not Renewables!)

Unpacking Rising Electricity Costs

With rising living costs, it's essential to understand the factors driving electricity price increases and explore effective ways to mitigate them. The Australian Energy Regulator (AER) has forecasted power bill hikes of 5% to 8% for the 2025-26 financial year, while Victoria’s benchmark is below 1%.

What’s Pushing Prices Up?

The two main contributors to rising electricity bills are:

1. Wholesale Costs: The expense of generating electricity.

2. Network Costs: The cost of transporting electricity through infrastructure.

Gas Prices - A significant driver of wholesale price spikes. Gas prices have historically influenced 50%-90% of pricing intervals, and outages at coal power stations increase reliance on expensive gas-powered generation.

Aging Infrastructure - Frequent outages at coal-fired power stations force the use of costly gas-generated power, further increasing costs.

Renewables: Not the Culprit

Data from the Institute for Energy Economics and Financial Analysis (IEEFA) shows that higher renewable energy penetration often correlates with lower wholesale prices due to their zero fuel costs. Expanding renewable energy sources like wind and solar could help stabilize and reduce wholesale prices.

Tackling Network Costs

IEEFA's research found $15 billion in supernormal profits on top of the expected $17.6 billion from network businesses. Better regulation and reducing peak demand can help control these costs.

Reducing Your Power Bill

• Smart Upgrades: Use energy-efficient appliances, better insulation, and install rooftop solar with storage.

• Demand Management: Use consumer-owned tech like batteries and smart air conditioners to reduce peak demand.

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