A slight decrease in the Australian Energy Regulator's final Default Market Offer (DMO) for 2024-25 shouldn't deflect from the broader issue of too many South Australians still paying too much for their electricity, according to the SA Council of Social Service.
The 2024/25 DMO has been set by the AER at $2,216 for SA residential households, a decrease of $63 or 2.8% on the 2023/24 DMO.
There has been a decrease in the wholesale cost component by $205 to $793, or 21%, from $998 in 2023/24. Wholesale costs were up 68% in 2023/24 from $592 in 2022/23, which still represents an overall increase of 34% of the wholesale cost component from 2022/23 prices.* The 2024/25 DMO also sees a 9% increase in network costs from $843 in 2023/24 to $922 in 2024/25.
SACOSS welcomes the slight reduction in the DMO and the AER prioritising affordability and cost-of-living considerations in its determination - however, this reduction is still outweighed by the much bigger DMO increase of 23.9% for 2023/24, and the potential for the DMO stabilising at higher price levels in South Australia.
The DMO is not designed to be the cheapest offer in the retail electricity market, but is aimed at protecting consumers - particularly those customers who have not engaged or cannot engage in the market - from ‘unjustifiably high prices’. It is the ‘maximum price’ a retailer can charge a customer on a standing offer in SA. It is also used as the ‘benchmark’ or ‘reference price’ against which retailers advertise their competitive market offers (also known as acquisition offers).
This issue was highlighted by the Australian Competition and Consumer Commission's latest Inquiry into the National Electricity Market Report.
The report looked at the energy contracts of more than 5 million customers and found nearly half (47%) of all customers, and 42% of concessions customers, are paying equal to or above the DMO price.
It also found 79% of customers would be better off if they switched to a competitive acquisition offer (available through the Federal Government's Energy Made Easy website).
SACOSS encourages consumers to call their retailer to ensure they’re on the best plan, and check online or ring the state government’s Concessions Hotline on 1800 307 758 to see if they are eligible for concessions.
Consumers should ask their retailer for help if they are struggling to pay their bills. Retailers are legally obliged to offer a payment plan or hardship supports. It is illegal for consumers to be disconnected if they are keeping to a payment plan or are on a retailer’s hardship program.
Quotes attributable to SACOSS CEO Ross Womersley
South Australian households - particularly those on lower incomes - shouldn't be required to constantly engage with the energy market to be protected from energy prices that exceed the DMO. This defeats the purpose and objective of the DMO.
In its latest report the ACCC recommended more customers should be supported to engage with the market and switch plans.
But under the current rules, even if customers do switch to a better offer, retailers can change the 'rates and charges' under that new plan with only five days' notice, without needing the customer's consent.
Retailers can also change a customer from a flat-rate tariff to a time-of-use tariff - which can come with a 14-hour peak period - without any advanced notification at all.
The DMO is not providing a safety net for disengaged customers at a time when nearly half the customers on market contracts are paying at or above the DMO.
We need to see reforms that ensure the DMO is a fair and efficient offer all households can automatically default to when the market offer they are on exceeds that amount.
*An earlier version of this media release incorrectly stated the 2024/25 DMO was 30% higher than 2022/23 - this figure related to the wholesale component cost. The 2024/5 DMO represents an increase of 20.4% from the 2022-23 DMO.