Households to save with power bill limits

The sun is setting on power giants' standing offers, with government introducing a new price limit.
The sun is setting on power giants' standing offers, with government introducing a new price limit.

Hundreds of thousands of households and small businesses are expected to save on their electricity bills with the introduction of a new government-enforced price limit.

The Australian Energy Regulator sets caps for what power giants can charge customers on default standing offer contracts.

The new lower price begins from July and will result in savings of up to $116 for households and $441 for small businesses.

It will apply for customers in NSW, southeast Queensland and South Australia.

Regulator Clare Savage said $65 million in bill savings would be shared among some 727,000 customers.

"The default market offer is not designed to be the most competitive deal but rather it is a safety net for customers who don't or can't shop around when it comes to their electricity contract," she said.

"Most retailers have cheaper energy deals on offer, so shopping around remains the best way to get a better price."

The other type of power bill is a market offer, where prices are set by energy retailers and discounts are often advertised.

But the prices can change at any time.

Federal Energy Minister Angus Taylor introduced default market offers in 2019 to bring down power bills.

"As we bounce back from the COVID-19 pandemic, low energy prices will help drive our economic recovery by boosting the spending ability of households and businesses," he said.

Energy Consumers Australia chief Lynne Gallagher says people can save more by shopping around for deals.

"This further relief for some energy consumers shows that the protections and measures the AER has ushered in are flowing through in the form of lower prices," she said.

"That's a very good thing but it's also important that all consumers understand they can do better than these default market offer prices and that they know how to go about getting a better deal."

It comes as the Minerals Council of Australia says it's false and misleading to describe the $7.84 billion fuel tax credit as a subsidy.

It provides a refund to industry for diesel.

'Any move to reduce fuel tax credits would introduce a tax distortion by imposing a tax on industries that are reliant on diesel fuel to generate power and operate heavy machinery," MCA boss Tania Constable said.

"It would significantly undermine the competitiveness of these industries and impact jobs in regional Australia."

Australian Associated Press