Why your electricity plan keeps getting more expensive

If your electricity bill seems to creep up every year even when your usage stays the same, you're not imagining it. Australian electricity prices have increased significantly over the past decade, and the reasons are more complex than "energy companies are greedy." Here's a clear breakdown.

The three parts of your electricity price

Your electricity rate includes three components bundled together by your retailer:

• Wholesale electricity — the cost of generating the electricity itself.
• Network charges — fees to transport electricity through poles, wires, and substations to your home. These are regulated by the Australian Energy Regulator (AER).
• Retail margin — the retailer's cost to operate plus their profit margin.

Network charges make up roughly 40–50% of most retail electricity bills. They're regulated, but they've been rising as networks invest in upgrading infrastructure and managing the transition to more distributed renewable energy.

The gas price shock of 2022–23

The immediate cause of recent sharp price increases was the global gas price shock following Russia's invasion of Ukraine in 2022. Australian gas-fired power plants set the wholesale electricity price more often than you'd expect — because they're called on when demand is high. Higher gas prices flowed directly into higher retail electricity prices from mid-2022 into 2024.

Why hasn't the price come back down?

Wholesale prices have moderated somewhat since the 2022 peak. But network charges, which are set 1–5 years in advance by regulated determinations, take longer to adjust. Retailers also price in risk — they don't immediately pass on wholesale savings if they're uncertain about future costs.

The "loyalty tax"

Here's the uncomfortable truth about retail electricity: retailers make more money from customers who don't shop around. A customer who last switched in 2015 is almost certainly on a worse deal than a new customer signing up today.

This is sometimes called the "loyalty tax" — the premium paid by loyal customers who haven't switched. Australian consumer groups estimate this can be worth $200–$600 per year for a typical household.

What can you actually do about it?

The most effective action is to compare and switch regularly — ideally every 1–2 years.

Beyond switching, other options include:

• Installing rooftop solar: typically reduces bills by 40–70% for households that can afford the upfront cost.
• Shifting usage to off-peak times: if you have a smart meter, time-of-use tariffs can save money if you run appliances like dishwashers, washing machines, and EV chargers overnight.
• Energy efficiency upgrades: insulation, LED lighting, and efficient appliances reduce kWh consumed rather than the rate paid per kWh.

The good news

As more renewable energy enters the grid, the long-term trajectory for wholesale electricity prices is downward — particularly in states with high solar and wind penetration. The transition creates short-term price volatility, but the structural cost of renewable generation is falling every year.

In the meantime, the most reliable thing you can do is compare your plan regularly and make sure you're not subsidising someone else's cheaper deal.