How Big Energy lost millions and why you're paying for it

You've probably heard us talking about Big Energy's multi-million dollar mess up. Possibly even from a bathtub...

Pictured: not Margot Robbie, sadly.

But you might be wondering: what actually happened? And why are Aussies seeing their energy bills rise while Big Energy is paying less? Let's take a look.

The Big Picture

Global shockwave in Ukraine

Last year Russia’s invasion of Ukraine caused a ripple effect that impacted energy industries around the world. One of those effects was record billion dollar profits for fossil fuel companies like Shell, ExxonMobil, and Chevron, as well as Australian coal and gas exporters.

In short: sanctions on Russian exports shrunk global fossil fuel supplies, driving up costs (and profits) for exporters globally.

Coal isn't exactly dirt cheap anymore

We won’t deny it: once upon a time coal and gas were cheap forms of energy. But that’s simply not the case anymore. 

For instance, in 2021 energy generators could buy a tonne of coal for $75. In 2022, that same tonne would cost $370. This has created a chain of events that spiked energy generation prices last year and ultimately your bill.

Why so expensive? Because there’s not enough supply to meet demand – unlike, say, abundant renewable sources like wind and solar. Speaking of…

Ageing Fossil Fuel Generators and Slow Renewable Investment

Coal and gas-fired power plants aren’t exactly cutting-edge, cost-efficient technology. In fact, when Liddell Power Plant powered down, it was over 50 years old.

We’d say good riddance to bad rubbish, but after a decade of insufficient investment in renewables, Australia didn’t have enough infrastructure to replace the load and prices soared.

But what if we did? Just take a look at the ACT, which sources 100% renewable electricity and actually saw a price decrease in 2022 when other states saw massive increases.

Coincidence? Not according to the CSIRO, who are pretty sure renewable energy is responsible for keeping prices low.

What Does This Mean For You?

Australia's Collateral Damage
While exporters and generators made billions, it was the opposite story for Australian energy retailers.

If you’ve shopped around for energy lately, you probably noticed that the market feels a bit thinner. Last year, many small players had to call it quits including Enova Energy, Elysian Energy, ReAmped and LPE.

Their exit not only reduced consumer choice but also led to an unintended consolidation of power under the Big3 – Origin, AGL, and Energy Australia. Many Aussies found themselves automatically transferred to these giants when their original providers went under.

Does that mean Big Retailers made millions too?

While last year was a profitable time to produce energy, it was a rough time to be buying energy. Although retailers were buying energy at an increased wholesale price, they were locked into selling it at a set price. And the results speak for themselves…

Big Energy’s Big Losses:

  • Origin: recorded a FY23 loss of $111 million.
  • Energy Australia: recorded a loss of $206 million between January and June 2022.
  • AGL: recorded a FY23 loss of $1.2 billion.

But it's hard to feel sorry for Big Energy.

The impact on you (and your wallet)

While Big Energy's losses were significant, guess who’s going to have to foot the bill in the end. Here’s a hint: it’s not them.

Unsurprisingly, as of August 1 of this year, Big Energy companies increased their rates. Why? So that you can pay off their massive bill from last year of course.

Origin and AGL put up their rates by around 25%, or roughly $361 a year for the average Victorian household.

The kicker is that while their rates are increasing, wholesale prices are actually dropping – meaning they’re now buying energy at cheaper rates and selling them with a hefty markup. So essentially, you’re paying off their bill.

If retail prices are rising, why not cut out retailers?

But don’t worry, there’s a way for Victorians to avoid paying Big Energy’s Big Bill: ditching traditional retailers and buying their energy at wholesale prices.

That’s actually what we do at Amber, because we believe in giving power back to people (that means you). By providing access to wholesale energy prices, without unnecessary retail markups, we're offering a direct route to often cheaper energy bills and supporting investment in Australia’s renewable infrastructure. 

Over the next 12-18 months, wholesale prices are projected to be more consistent and generally lower, making this the ideal time to rethink how you purchase energy.

Source: Australian Energy Regulator, Default market offer prices 2023-24

But it gets even better. The wholesale price of energy actually goes up and down throughout the day. Amber customers can further reduce their bills by shifting their high-intensity energy usage (ACs, heaters, washing machines, etc.) to times when wholesale prices drop due to lower demand or higher renewable production.

Sick of Big Energy Companies? We are too!

Together with Amber customers, we’re creating a shift in the Australian energy market.

Shifting the power from Big Energy companies to Aussie households, keeping money in your pocket versus theirs. Plus, by shifting demand away from coal and gas, and towards those times when the grid is greener, we can all help accelerate Australia towards a 100% renewable energy future. 

So, if you want to stop overpaying for energy and instead invest in a greener, cheaper future, we can help you get started.