Are Australians really getting ripped off when it comes to electricity prices? It's a hot topic, and one that's often misunderstood. Let's dive in and uncover some surprising truths.
Electricity Prices: The Great Australian Myth?
Many Aussies believe we're paying through the nose for our power, but is that really the case? Let's explore the facts and set the record straight.
When compared to other countries, Australia's electricity prices are not as outrageous as some might think. In fact, we're right in the middle of the pack, and when you consider our relatively high incomes, we're actually doing better than most.
According to the Australian Energy Council, the average household electricity price between 2023 and 2025 was 39 cents per kilowatt-hour (kWh). That's just a tad above the OECD average of 38c per kWh, putting us at 15th most expensive out of 38 countries. But here's where it gets controversial: comparing prices alone doesn't give the full picture.
Carol Tran, an analyst at AEC, points out that comparing prices between countries with vastly different living standards can be misleading. When we adjust for the cost of living, Australia drops down the rankings to 24th, well below the OECD average. So, in terms of affordability, Aussies are doing pretty well on the international stage.
But has our ranking changed over time? There's been a lot of talk about Australia losing its cheap energy advantage, but the data suggests otherwise. A decade ago, our ranking was similar to today's, with residential power prices putting us not far below the OECD average.
In other words, our electricity prices have increased, but so have those of other countries. It's a global trend, and one that's not unique to Australia.
Now, let's talk about the recent increases in electricity bills. We all know prices have been rising, but by how much, and why?
The Australian Energy Regulator sets a default market offer (DMO) for Queensland, NSW, and South Australia, which acts as a cap and benchmark for electricity retailers. Over the past three years, the DMO has increased by 30%-32% in Queensland and NSW, and by 25% in South Australia. Interestingly, Victorian power bills have increased by a lower 19% between 2022-2023 and 2025-26.
Despite these increases, you might be surprised to learn that Australians on the east coast are actually paying lower power bills now than they were three years ago. How is that possible? Well, taxpayer-funded energy rebates have played a significant role, especially over the past two years, as the world dealt with the fallout from Russia's invasion of Ukraine.
Without these subsidies, the picture looks very different. Household power bills would have climbed by 19%-22% in NSW and South Australia, by 14% in Victoria, and a whopping 66% in southeast Queensland. That's a significant difference, and it highlights the impact of government intervention.
So, what's driving these rising power prices? Johanna Bowyer, the lead analyst for Australian electricity at the Institute for Energy Economics and Financial Analysis, has some insights.
Bowyer attributes the increases to wholesale electricity prices and the cost of the network infrastructure. She argues that renewable energy is not to blame for high power bills, contrary to popular belief. Instead, climbing coal prices and gas prices have been the main drivers over the past 10-20 years.
Research by Griffith University found a strong correlation between gas prices and electricity prices in the east coast's national electricity market in the decade to 2021. Coal-fired power plant outages have also contributed to higher wholesale electricity prices more recently.
The key to cheaper energy, Bowyer suggests, is reducing our reliance on gas. She advocates for more renewable energy and energy efficiency, especially for individual households. Switching to rooftop solar and storage, and investing in efficient electric appliances, can reduce energy bills by a significant 80%-90%.
However, building the infrastructure for a clean energy grid is proving to be more expensive and time-consuming than initially hoped. As Tony Wood, a senior fellow at the Grattan Institute's energy program, writes, "While the cost of generating power from renewables is very low, we have underestimated the cost of getting this power to markets and ensuring its reliability."
So, while cheap green power is offsetting some of the higher costs, many Australians are still wondering when they'll see the benefits of cheap renewables in their power bills. The answer, it seems, is not yet.
There you have it, a deeper dive into Australia's electricity prices. What are your thoughts? Do you agree with the experts' assessments? Feel free to share your opinions and insights in the comments below!
