The ‘stealthy’ price-setter of Australian energy bills
Expensive gas, unreliable coal power plants and a retailer “loyalty tax” are the main causes of Australia’s rising electricity bills, according to a climate think tank report.
While the Climate Council’s analysis largely blames fossil fuels for wholesale sales spikes, it also reveals systemic abuses by retailers.
In the last 12 months alone, 14 energy companies have breached consumer laws, costing Australians nearly $55 million through overcharging and misleading behaviour.
Co-author Joel Gilmore said the report told “a pretty disturbing story.”
Beyond legal violations, millions of customers are penalized for staying with the same provider, and a “loyalty tax” costs the average household hundreds of dollars a year extra.
“We really need to let our retailers know that we are all expecting better things to come,” Dr Gilmore told AAP
Australian households and businesses are paying more for electricity over the past five years, while energy users are promised lower bills from renewable energy sources instead of coal.
Dr Gilmore said the aim of the report was to understand this discrepancy.
The CSIRO argues that renewables and storage are the cheapest alternatives to coal stations, which are old and need to be replaced at great expense anyway.
However, as the transition progressed, gas plants used during peak demand hours (such as evening hours) became expensive to operate.
Although gas provides only five percent of total electricity, it determines the price of other types of generation by up to 90 percent.
Gas prices have soared since Russia invaded Ukraine in 2022, and despite the abundance of resources, Australians are paying the increasing global price as much of the gas is shipped overseas.
Energy expert Greg Bourne said multinational gas companies have made close to $100 billion in extra revenue since the invasion of Ukraine.
“Gas is the hidden price determinant that connects our household budgets to volatile and high-cost global markets,” he said.
Australia’s aging fleet of coal-fired power stations is also leading to higher prices; because these plants are prone to failure, leaving the grid dependent on gas.
Other drivers of high energy prices include a period of overbuilt poles and cables driven by fears of state government blackouts.
Energy Minister Chris Bowen confirmed on Wednesday that renewables also help meet Australia’s climate commitments; Record levels of solar and wind contributed to reducing emissions by 1.9 percent for the year to September 2025.
