Energy Costs Skyrocketing

The market is changing and those with solar will be relative beneficiaries.

If my charges doubled I’ll still be well ahead of my pre-solar days. Some of the possibilities re who will have the best deals might turn near 180 degrees to the companies that own generation. It looks to be a wild ride.


It is not just Discover Energy doing doubled pricing. It appears the worst are the smaller resellers who cannot absorb any of their cost increases.


l am waiting to see if my provider, Red Energy, raises its prices…its power is sourced from Snowy mountains hydro so will be curious how they justify any possible rises

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It doesn’t matter the source of the generation. If you are connected to the main grid (living in QLD, NSW, VIC, SA or TAS), there will be an increase in electricity charges. As the network is interconnected (states and generation), what happens with one type of generator impacts on all prices.

An easy way to explain it is if the pool or wholesale price of electricity increases, which it has, generation (to the uncontestable market which is almost all domestic consumers) to the market will be paid the pool price for the electricity. This occurs irrespective of whether it is renewable to non-renewable generation. This ABC article has tried to explain it for the Tasmanian situation, which generation almost all the time is through renewables.

It is a bit like conventional farmed wheat world price increases, so does organically grown wheat. The two markets are intertwined and what happens in one, impacts on the other.


Prices are not segregated by source. It is complex but you can have the situation where if the price of gas goes up the price of all goes up.


Thanks for the replies…l may to think about expanding my solar set up


The house we bought already had solar (in Qld) so that meant unlike the previous owners, we never got the same benefit on price for solar produced as it doesn’t transfer. I try to use my power through the day where I can. We upgraded our solar a couple of years back to a better system and while we make some savings, I also ensure there’s a regular monthly direct debit into our power bills. Because we live rurally, we also only have one choice of provider and technically it’s owner is the state government so that we’re not disadvantaged a great deal by where we live.
Apart from the oven running on occasions in the evening (not a common thing) we try to run things like the dryer and washing machine through the day. The only time we manage to get in Credit with our solar is at the end of summer or some time in autumn and that credit is usually chewed up in winter anyway. Of course with the wet weather of late, our ‘sunny’ days have been very limited. We’ve had one sunny day (today) this week and more rain is expected tomorrow. Still happy we have solar, would hate to think what our bills would be like without the solar.


Two views of the problem that say much the same thing.

4 reasons our gas and electricity prices are suddenly sky-high


Why did gas prices go from $10 a gigajoule to $800 a gigajoule? An expert on the energy crisis engulfing Australia

Note that the growth of sustainable energy is not mentioned - quite the contrary.

Will the new PM upset the gas industry and use his powers to hold back some gas from export for domestic use? We wait with bated breath.


Last month I switched to Diamond Energy after reading the choice review saying “Diamond Energy provides power to 13,000 customers across Australia, generating electricity solely from renewable sources. The company claims to provide more sustainable power than their competitors, at an affordable price.”

I understand that coal and gas prices are increasing due to the war in Ukraine and our dysfunctional energy market here in Aus.

However what I don’t understand is why those factors would cause green energy prices to jump by over 25% from July 1. I mean, it’s not like Putin is throwing shade over Australian solar farms.

I have an email from them saying the all day rate is jumpnig from 23c/kWh to 28.33c/kWh. That’s a nearly 25% increase. Talk about post purchase dissonance!

Anyone know what’s going on there?


Hi @craigiebabe, welcome to the community.

In relation to why power prices have increased, including for renewable/green energy, it was discussed in my earlier post in this thread.


Ok I see in this thread that the suggestion is that “prices are not segregated by source.”

However if that was the case, then why is it that energy providers charge more for green power than for non-green power? I was charged a premium of >10% when I selected the green energy option with my previous retailer.

Seems to me the energy retailers can indeed have their cake and eat it too.


The reason why green energy has been more expensive to buy from a consumer point of view, includes:

  • renewable energy has been more expensive to supply to the main grid and the costs to move towards higher percentage of renewables costs will increase further. I explain why here.
  • the premium was to encourage investment in renewable electricity. If consumers are willing to pay a premium, it creates a demand/market.

Other reasons can be found here…

In relation to segregation of prices, while some generators have short to medium term contracts to deliver electricity at a contracted price, the retail cost of electricity is very much influenced by the pool or market price. This means prices are not truly segregated as the pool price is the retail cost of electricity bought outside fixed price contracts. While there may be contracts,) most retail electricity is set by the state government energy regulators. The regulated price is directly influenced by the pool/market price. When the average pool/market price is high for extended periods, like it is at the moment, regulated prices which most domestic consumers pay for electricity also goes up. This impact is irrespective of the cost of generation and demonstrates there isn’t segregation.

It is worth noting that the market price is driven by two main factors (and a number of minor factors). These two main factors are the average cost if generation within the market and the demand. Where generation costs increase, say due to higher fossil fuel costs or through more expensive generation types (which is that happening at the moment), this impacts on the average generation cost increasing the average regulated or retail price. When demand meets or exceeds supply/generation (which has also happened recently), then standard economic principles apply where price increases. The same applies when there is excess generation capacity… cheaper/profitable forms of generation supply the market resulting in lower market prices.

Electricity in the grid also isn’t segregated. The flow doesn’t discriminate between renewable or non-renewable generation sources. To segregate, it would require two separate networks.

Edit: to clarify contract prices. Contracted prices stabilise short term price movements. Contracts are renegotiated regularly and are principally based on the pool price (a good example is the regulated prices set by state energy agencies for domestic consumers - when the longer term pool price increases, the benchmark/regulated prices also increase). Consumers are aware that for the 2022-23 year, their electricity prices have increased substantially due to a higher average pool price… When the pool price is higher, the contract and benchmark price is also higher. This is due to the fact that a generator has the opportunity to supply to the market electricity at the pool price. If the contract price was low, then there isn’t the incentive to sign a contract. This also shows why electricity prices aren’t segregated between generators or generation types. Even Diamond Energy has indicated this on their website by stating"

With the significant increases in wholesale electricity prices, the government regulatory bodies have announced increases to the benchmark electricity prices. We are expecting to increase our rates and amend our discounts and solar feed in tariffs.

The other example which shows that pricing isn’t segregated is using the FiT for domestic solar systems. If you have a PV system and have installed it more recently, you will know that the FiT changes from year to year. The FiT goes up or down, like the average market price. When the average market price goes up, FiTs also generally go up (our own FiT increases from 6.501/kW this year to 8.883kW next year - a 35% increase). Having a PV system one knows that the cost to supply the electricity to the grid hasn’t changed from year to year. If prices were segregated, then the price from year to year would be fixed and removed from the average market price. This isn’t the case as the price for generation isn’t segregated from the average market price.

As outlined in the previous paragraph, segregation could only be achieved with two separate networks (or a separate network for every generator) and possibly the regulator prescribing the price that the generator gets for supplying the market (this was recently done by setting $300/MW - and while it caused a cap on prices, it caused supply constraints - generators where cost of generation exceed $300/MW removed themselves from the market. Such an approach would be a strong disincentive to not invest capacity in the Australian electricity market.


Welcome to the community @craigiebabe.
They are segregated, with each retailer responsible for choosing which generator/s and the conditions they contract for.

It’s not possible to generalise and say the costs are the same for all retailers. Although all must use the network monopolies (approx 50% of total costs for transmission and distribution) to get the power purchased to the customer. The power may have been purchased on a contract or on the spot market from the generators. To confuse everyone the latest daily concerns and examples of pricing relate to the wholesale prices offered on the spot market. How the spot and long term contract wholesale prices differ is explained as follows.

Diamond and any other ‘green power’ retailer is free to choose which wholesale suppliers of electricity it contracts with. For 100% renewable it would need to contract with a number of suppliers including wind, solar PV, hydro and storage (EG battery or pumped). Demand is variable as is supply while customer consumption looking ahead uncertain. It’s unlikely Diamond would get the best prices without commitments to take a fixed or minimum amount. It would be competing for any shortfall in it’s customer daily and hourly (5 minute intervals) needs for additional supply from the renewables available at that time, IE the spot market. While some of those sources may be very cheap generation (EG wind from SA or hydro from Tasmania) those generators sell their uncommitted renewable or ‘green power’ on the spot market at the agreed market price. Retailers also often hedge against the variability, which adds a further cost, which will be different for each retailer.

The discussion concerning the true cost of renewables may seem a little illogical, when others suggest renewables are more expensive or cheaper than conventional coal and gas generation. All forms of generation compete in the same market. Since the dominant suppliers of generation use coal and gas their costs - prices dominate the spot market at peak times and when supply from renewables is limited. When renewables can supply the majority of the demand the spot market price is very low.

The increase in pricing from Diamond will reflect the AER approved changes/increases in the rates charged by the distributors. There may also be an increased cost to Diamond in any hedging against future variability. Suppliers of power from renewables can also increase their prices because the wholesale contract price is not regulated. They are not obliged to contract at a lower cost to Diamond who still needs to compete against all the other retailers. There are other factors that can influence your offer depending on your state/territory and distributor. The NEM pricing and regulation is not uniform across all it’s customers.

Link to details of the AER approved price increases 2022-23 for the default offers in each supply area.


Other points of view


I find West rather over the top. For example, where did any reputable analyst or government speaker say that we would have to subsidise FF indefinitely?

He is right about some things though. We are stuck in a bind due mainly (as West points out) to the inaction of the previous government but that doesn’t mean there is any quick fix free of nasty side effects, or any quick fix at all really. This may well involve paying more for FF for a while but if there is no choice there is no choice.

Suck it up people, a majority voted for representatives who wanted to do as little as possible, or who wanted to take action but were never given enough power, for decades and now all of us will have to deal with the consequences. That’s how democracy works.

This particular problem is a very close analog of the politicisation of all climate change. For decades we were told acting early would have the least cost solution. Well as a nation we didn’t take that advice and now we pay more. Look forward to other kinds of transitions that ought to have been started 30 years ago that will cost more; the electricity generation, transport and marketing system is not unique in that.


He was referring to the suppliers. And it was an implication, rather than an instruction :slight_smile:

There is a choice.
Consumers face paying more for using natural gas at home. It’s important to consider the major portion of domestic gas usage is by industry and for electric power generation. Of electric power consumption consumers are NOT the largest user.

The increased cost of energy supplied from natural gas will impact every consumer product. For those employed in energy intensive industries the risks of being unemployed through loss of demand or external competition are also real.

There are solutions. At some risk of upsetting the multi nationals and select shareholders invested in Australia’s FF and gas industry. Apparently they can choose to export the gas locally produced at the lowest cost while selling (higher cost? ) production domestically at a premium.

What we’ve had, however, for more than six years, have been ongoing domestic gas shortages on the east coast and massive price hikes. And, for large periods of time, they’ve sold gas into Asian markets at much lower prices than they sell into the domestic market.

The frustration for consumers will be having to pay for an ongoing and now premium for energy as well as pay for the upfront costs of converting to renewables. Not so easy with high inflation or prospects of recession, where every dollar counts.


I agree with most of what Verrender says, I have played a similar tune here a few times.

A gas reservation policy and getting a fair return to the taxpayer for extracting their gas were the responsibility of several previous federal governments. That boat has sailed.

I don’t see Albo doing a repeat of Gillard’s stoush with the FF industries. In this political environment he may eventually win but it will cost a great deal of capital to do it and he has a long agenda that needs support. I don’t see him denting the piggy bank that much the first week he gets behind the despatch box.

Secondly releasing the pressure on east coast gas supply will moderate the price of power but is not going to counteract all the coincident factors that have cause the current spike. We are going to have to wear some costs regardless.

There is a silver lining to this cloud - well maybe a pale grey one. Spiking gas prices will encourage domestic users to go electric sooner! Pity the manufacturer who has no choice.

[Edit] The Treasury has waved his gun about again, will he pull the trigger? If he does will it have the desired effect or will the exporters all say ‘Sorry nothing to spare, it’s all contracted offshore, terribly, terribly sorry’.


New member coming to this late. The thing I find so odd is that nobody is talking about energy efficiency as part of the equation.

It’s estimated that fairly simple measures could reduce average household energy consumption by a quarter, much more in some households. If the new government want to help people with cost of living and reduce energy prices by reducing demand, it could first send vouchers (Covid help style) to spend on WELS 4 (max 7.5L/min) and 5 star (max 6L/min) low flow shower heads and on tap aerators. Some households still have the old 20 litres per minute shower heads, and most sold today are around 9-12L/min, much more than needed for a good shower (with a well designed head). Saving on water bills and energy bills for heating water can be significant, even thousands a year for some. [See here though I can’t vouch for the accuracy Savings Calculator - Shower Timer ]

I just replaced an 18L/min shower head with an 8L one and a 9L one with a 5L/min Methven one (also gives a better shower!) in our new home with two teenagers. Now I can’t wait for our next bill…

So what I’m getting at is the new government could take the kind of energy and water saving schemes many councils/states have run in the past (schemes where tradies audit and install) to a new level for a couple of years with will and imagination. There’s plenty of low hanging fruit aside from big ticket items like solar and heat pumps: change lights over to LEDs, install low flow shower heads and tap regulators, install draft excluders and insulation, install low flush toilets, garden hose regulators etc.

Basically retrofit the national housing stock, creating jobs, reducing carbon emissions, reducing energy prices, reducing water use for the next drought, and maybe even winning the next election when people realise they enjoy permanent saving on bills worth hundreds or thousands a year.

The Japanese reduced electricity consumption nationally by 10% the year after Fukushima, 20% during peak periods. It seems odd to me that while gas prices go through the roof, and this is helping fund Putin, we don’t talk about reducing demand in any meaningful way. I would have thought environmentalists would make more of it too as a strategy for smoother transition to renewables.


Welcome to the Community @guyzer

Perhaps not in this topic, but if you search the Community using the search tool image for ‘energy efficiency’ and similar terms you will find a number of related topics and posts.

That is not completely true, for example

Could more be done, such as banning conventional gas fired boilers and requiring condensing models such as is required in the UK already? Yes - some efforts could be better, but there are some in progress.

Further Victoria for one has a years old program that has replaced incandescent and halogen lights with LEDs, and shower heads with low flow models, and has other related programs, free to the user. Truth said they are not high end products so the ‘free’ may not suit everyone.