If you recently heard news that benchmark electricity prices were dropping, then opened an email from your retailer telling you your charges are going up, you're not alone. Hundreds of Aussies have been hitting social media lashing out at their retailers and the rate-rise notices they’ve been receiving ahead of 1 July, saying the opposite.
The ABC ran a good piece on this yesterday. Russell Smith, who lives on the Sunshine Coast, has solar, a battery and an EV, and was told benchmark prices would fall by more than ten per cent. Then he got a notice that his daily supply charge was jumping 13 per cent and his solar export rate was being halved. At the same time, he received a newsletter from his local MP spruiking an electricity price drop. Needless to say, he was unimpressed.
A price comparison expert, Richard Foxworthy, quoted in the piece had a word for the phenomenon. He called it a "confusopoly".
It's a good word, because once you see how the electricity retail game works, the contradiction stops being mysterious and starts being predictable.
The benchmark price is a ceiling, not your price
The "benchmark" everyone's talking about is the Default Market Offer, or DMO. The Australian Energy Regulator sets it each year for NSW, south-east Queensland and South Australia.
Here's the bit that trips people up. The DMO is a maximum price, a safety net for customers who don't shop around. It's the ceiling, not the floor, and therefore set very high. Most people are nowhere near it, sitting on plans well under the DMO. According to the regulator, fewer than ten per cent of households are actually on a default offer. The rest are on market offers that sit below it.
So when the DMO falls, that's the ceiling coming down. It doesn't automatically mean the price you personally pay comes down with it. As the comparison expert put it in the ABC piece, a lower benchmark like we’re seeing this year, actually gives retailers less room to discount their market offers - the ones they go out with to win new customers. Already some retailers appear to be making their cheapest plans more expensive to claw back the margin they're losing.
So that's the first half of the puzzle: the figure in the announcement from the energy regulator and the figure in the notice from your retailer were never the same thing to begin with.
Understanding the bits that make up your bill
The second half is about how your bill is split up, and whether a falling benchmark price actually lands in your pocket.
Every bill has two main parts. There's the usage charge, which is what you pay for the energy you use. And there's the daily supply charge, a fixed amount you pay for being connected to the grid, whether you use a lot of power or none at all. In the main, your supply charge is made up of network costs from third party companies who look after our poles and wires. Retailers pay those costs, then decide how to recover them from you. And that's where the catch comes in.
Under changes the regulator has approved, retailers can now recover more of their operating costs through that fixed daily supply charge, potentially offering lower usage charges to offset it. The industry body that represents retailers calls this a "rebalancing" rather than a straight increase, and says more bills will go down than up this year. It also concedes that some bills may look like they're going up because of the shift, even when the total isn't.
That's the catch. On paper, lower wholesale costs and a lower benchmark should mean savings flowing through to households. But if more of your bill is made up of higher fixed charges you can't reduce, what’s the point in being offered a slightly lower rate on the energy you use? The usage charge you can influence shrinks, but the supply charge you can't avoid grows. The headline says prices are down, but there’s a good chance your energy bill is still creeping up.
If you've put money into solar or a battery to cut your usage, it hits even harder. You did exactly what you were encouraged to do, and the part of the bill you worked to lower is now a smaller slice of the whole. So, how is this going to help a traditional energy retailer make money off you? You guessed it - in a business model that relies on the margin between what you pay and what they pay, your retailer is probably going to widen it in the parts of the bill you're least able to see or avoid.
There's no hiding from the regulator
And the federal government is watching too. In response to recent reprice notifications and the pushback from customers, the Minister for Climate Change and Energy, Chris Bowen, has said some retailers appear to be lifting the fixed daily supply charge while trimming the per kilowatt hour rate, and that energy market law requires them to pass on sustained reductions in their costs. He has asked the regulator to examine whether shifting costs into a fixed charge, rather than passing the savings through, complies with misconduct and energy market laws, and to look at how the changes have been communicated to customers.
Some of those fixed charge rises are steep. According to SBS, some customers are facing increases to their daily fixed charge of up to 86 per cent.
The same week, the body that writes the rules for the national electricity market called for power bills to be simplified, because they're currently far too hard for most people to make sense of.
Simpler bills would be a genuine improvement. For now though, these are only reviews and investigations. The market you're making decisions in today is still a complicated one.
Why this looks different at Amber
Amber is a retailer too, and the regulated costs that make up a big chunk of your bill, like network charges, hit us the same as anyone else. When they go up, we pass them through.
The difference is what we do and don't make money on.
A traditional retailer buys energy on the wholesale market, adds a markup and sells it back to you. They earn more when the gap between what they pay and what you pay is wider. That's the model where the loyalty tax wins, and the consumer loses. Cheap rates reel you in, the discount quietly lapses and the longer you stay without watching closely, the more you tend to pay.
Amber works the other way around. We charge one monthly subscription fee and that's our margin. We pass through the wholesale price of energy with no markup, both when you buy it and when your battery or solar sells it back. We don't earn more when your usage or your energy costs go up, so we've got no reason to bury a clawback in your supply charge or let your rate drift up the longer you're a customer.
Solar exports are a good example. The customer in the ABC story had his export rate cut to two cents. With Amber, you're not on a low fixed feed-in rate. You get the wholesale price for what you export, which during an evening price spike can be worth far more than a couple of cents. Amber’s battery optimisation handles the timing for battery owners automatically, so you're selling when it's actually worth selling.
What to take from all this
You were told prices were coming down, and your bill may have gone up anyway.
The price that's falling is the benchmark - a reference price retailers measure their offers against. It's not a cap on what you can be charged, but most people pay a lower amount anyway. So the benchmark coming down doesn't automatically lower your price. At the same time, some retailers are moving costs into the fixed daily charge you pay no matter what, which is the move Bowen has asked the regulator to scrutinise.
The reason this is so hard to spot is that energy plans are difficult to compare on purpose. When you can't easily tell whether you're getting a fair deal, it's easy to keep paying more than you need to, especially the longer you stay put.
Amber is built to remove that problem rather than profit from it. You pay the wholesale price of energy with no markup, your solar and battery exports earn the real wholesale rate instead of a few fixed cents, and our only margin is a flat monthly subscription that doesn't grow when your bill does.
If the headline savings haven't shown up on your bill, see what you'd pay with Amber.
