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As of July 1, 2024, changes are coming to the Australian energy market. Both the Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) are requiring retail energy companies to reduce standard energy rates (depending on the location). This change reflects reduced wholesale electricity costs, and increasing network costs and will impact the electricity costs that have been burdening businesses. Here’s an overview of what these changes mean for you.
What’s Happening from July 1, 2024, for Electricity Costs in Australia?
From July 1, 2024, regulators such as the Australian Energy Regulator (AER) and Victoria’s Essential Services Commission (ESC) have reduced their regulated default rates (depending on your location). This change coincides with changes to network pricing, reductions in wholesale electricity costs and other cost drivers.
Energy retailers are busy updating their default rates, which apply to customers who have not signed up to a market contract rate. Next Business Energy has updated its default/standing rates as of July 1 and is in the process of updating our market rates for existing customers as of August 1.
The Default Market Offer (DMO) and Victorian Default Offer (VDO)
The Default Market Offer (DMO) and Victorian Default Offer (VDO) are designed to protect consumers who either cannot or do not shop around for better energy deals. These safety net offers set a price cap on electricity plans, ensuring that those on these plans are paying a regulator monitored and fair price. It is estimated that around 19% of small businesses are on these safety net electricity plans in Victoria.
Impact on Energy Prices
The impact of the DMO and VDO decision will vary across different regions. Some areas will benefit from reductions, while others might see slight increases, although still below the current inflation rate of 3.4%.
The Opportunity for Better Deals
The changes in the energy market generated by the DMO and VDO and the Network Pricing decisions will likely stimulate increased competition among retail energy providers. All retailers will be assessing and likely amending their retail price plans as a result of the Network Pricing changes and other market changes. This heightened competition could lead to more attractive offers being made available for businesses, making it an opportune time to compare energy rates and potentially switch to a more cost-effective plan.
Why Compare Energy Rates Now?
With the likely upcoming prices changes, now is a prime time to re-evaluate your energy plan. Comparing electricity rates and switching to a better deal could result in significant savings on your electricity bills. The Australian energy market is becoming more competitive, and taking the time to shop around can ensure you are not overpaying for your energy needs.
How to Compare Energy Rates
- Review Your Current Plan: Understand your current energy plan, including the rates you are paying and any additional charges.
- Use Comparison Tools: There are various online tools available that allow you to compare energy rates from different providers. These tools can help you identify the best deals based on your consumption patterns.
- Consider the DMO: If you are currently on a default plan, compare it with other offers in the market. The DMO serves as a benchmark, so any competitive offer should ideally be better than the DMO rates.
- Check for Incentives: Some energy providers offer incentives such as discounts for direct debit payments, green energy options, or loyalty bonuses. Consider these when comparing plans.
A Challenge and Opportunity for Businesses
The changes to energy rates from July 1, 2024, represent both a challenge and an opportunity for Australian businesses. The key takeaway is the importance of being proactive in managing your energy costs. By comparing rates and possibly switching providers, you can take advantage of the competitive market and ensure you are getting the best possible deal on your electricity.
Stay Informed and Contact Us
As we approach this time of year, it is important to keep an eye out for price change notifications from your retailer so you understand what is going to happen to your electricity rates. If you need more information or want to chat with our friendly team of advisors, we’re available Monday to Friday, 9:00 am to 5:00 pm (excluding public holidays). Contact Next Business Energy today to compare your energy rates and find the best plan for your business at info@nextbusinessenergy.com.au or 1300 GO NEXT (1300 46 6398).