05 September 2023
Through regular engagement with the community, Essential Energy understands the importance customers place on a safe, affordable and reliable electricity network.
Knowing customers are demanding a service they can trust also helps inform the decision-making of the Australian Energy Regulator (AER) each year when it considers the prices for Essential Energy customers.
In setting the prices for 2023-24, the AER acknowledged the need for Essential Energy to raise enough revenue to continue investing in the network to ensure they can deliver “safe and reliable electricity”.
Customers would be aware of the new prices that started 1 July 2023, following approval by the AER earlier this year. Essential Energy’s typical residential customers will see an increase of between $18.38 and $22.50 per quarter, depending on their tariff type.
If passed on in full by retailers, this equates to approximately a 3.75 per cent increase to customers’ total electricity bills. It’s important to remember network charges make up about half of customers’ overall bills, with generation and retailer charges making up the other half.
With increases in wholesale electricity prices and escalating inflation across the economy adding to the cost of running Essential Energy’s network across regional NSW, customers will inevitably be facing higher power bills in the year ahead.
Network charges for the current year include an average 7.52 per cent increase in required revenue from Essential Energy’s distribution charges, the Climate Change Fund Levy and NSW Electricity Infrastructure Roadmap Contribution. For context, the measure of inflation used by the AER was the most recent official Australian Bureau of Statistics data during the approval process of 7.83 per cent.
The inflation embedded in the wider economy is the number one factor behind the increase in network charges. In the same way many households feel the pinch from rising costs of living in a high inflation environment, Essential Energy is like many businesses facing higher operational costs. With rampant inflation, the cost of running the network – everything from materials, equipment and fuel costs – increases significantly.
In addition to network charges, the cost of generating electricity - wholesale electricity market prices - and the impact of inflation across the whole energy supply chain, may see customers’ overall bills increase by up to 22 per cent.
It underscores why Essential Energy remains committed to keep network charges as low as possible. Over the past decade Essential Energy’s distribution network charges have shrunk by 37 per cent for a typical residential customer in real terms. Charges for a typical business customer have been cut even more, a 41 per cent fall, during this period. Essential Energy’s long-term focus on network charges and ongoing transformation efforts across the business have helped generate these savings for customers.
While Essential Energy’s network charges aren’t rising as much as other parts of the economy, we acknowledge significant price increases may be challenging for some customers, particularly given the cost-of-living pressures facing many households. Given the broader impacts of a high inflation environment, we understand that many customers may be facing financial hardship.
Essential Energy is actively encouraging customers to speak with their retailers about payment support options, and to shop around for better deals from retailers. The Energy Made Easy website, operated by the AER, is a valuable resource to help customers find energy plans that suit their needs.
We encourage any customers experiencing difficulties paying their electricity bills to contact their retailers at the earliest opportunity. The earlier customers get in touch, the sooner they’ll get help to work out a plan that best suits their circumstances.