Millions of Australians could see relief on their electricity bills in the next financial year, following a proposal by the national energy regulator to reduce power prices across several regions.
The Australian Energy Regulator (AER) has put forward changes to its Default Market Offer, which caps the maximum rates electricity retailers can charge customers in New South Wales, Queensland and South Australia.
Under the proposal, residential households could benefit from bill reductions of up to 10.1 per cent in some areas. This comes as welcome news for many Australians facing ongoing pressure from rising interest rates and broader cost-of-living challenges.
In New South Wales, households could see electricity bills drop between 2.4 per cent and 8.2 per cent, equating to savings of up to $226 annually. In south-east Queensland, residents could save as much as $216 per year. Small businesses are expected to benefit even more significantly, with some in New South Wales potentially saving over $1,300, while businesses in Queensland could see reductions of up to 12.8 per cent, or around $550.
The AER noted that the extent of savings would vary depending on location, but emphasised that millions of Australians are likely to benefit overall.
According to AER Chair Clare Savage, the planned reductions are mostly driven by reducing costs across the electrical supply chain. This includes lower wholesale electricity prices, reduced volatility in the market, and increased generation from renewable sources such as wind and battery storage.
Retail operating costs have also declined, alongside reductions in the cost of environmental schemes, further contributing to the potential price cuts.
These proposed changes mark the most significant reduction in electricity prices since the surge triggered by Russia’s invasion of Ukraine in 2022, which drove up global coal and gas prices.
The draft determination will now be opened for consultation with stakeholders, with a final decision expected in late May.
However, the agency has cautioned that global circumstances could still impact the final conclusion. Ongoing tensions in the Middle East have led to rising oil prices and concerns about supply disruptions.
While Australia continues to invest in renewable energy, Savage acknowledged that the electricity system remains exposed to fluctuations in international fossil fuel markets.
The AER confirmed it will continue to monitor global conditions closely before finalising the Default Market Offer in May.