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Gas Price Cap What Is It And How Will It Affect Your Energy Bills
Bill shock is no longer reserved for Aussies who are already struggling financially. It’s something every consumer has faced in recent months and will continue to experience for the foreseeable future. In fact, some Victorian gas customers will pay 26% more on their energy bills from February.
The good news is the government is fed up as well and has already started to take action. You might have heard about the gas price cap – but what does it actually mean, and will it even help lower your energy bills?
Key points:
The government’s gas price cap comes with a number of caveats – particularly with it only lasting for 12 months.
A promise of $1.5 billion in energy relief is set to assist homes and small businesses this year, but only beginning in Q2.
The biggest three energy providers have all said they will raise their standing offer prices by at least 20% in 2023.
If you have the capital, switching to a fully electric home rather than relying on gas could save you hundreds if not thousands on your annual energy bills.
What is the Australian gas price cap?
Just a little over a month ago, the government’s Competition and Consumer (Gas Market Emergency Price) Order 2022 came into effect.
Here’s what you need to know about the gas cap:
It’s a temporary price cap of $12 per gigajoule (GJ).
The price cap will only apply for 12 months at this stage.
These changes only really apply to gas producers and their affiliates to wholesale customers who operate on the east coast of Australia and in the Northern Territory.
The cap doesn’t apply to supply contracts entered into before 23 December 2022.
If any company breaches the emergency order, they may be liable to pay $50 million – or more – in penalties.
Switch and save: The best way to save on your energy bills is to take matters into your own hands. All three major energy retailers – AGL, Origin and EnergyAustralia – have indicated they will increase their standing offer prices by more than 20% this year[SJ1] . So now is the perfect time to switch gas providers and get a more cost-effective deal on your energy.
How to get support for bill stress
Yes, energy prices are likely to continue surging over the coming months. And no, the gas price cap might not have much of an impact on your bills over the short term. But you don’t have to suffer in silence.
Speak to your current provider: The squeaky wheel gets the grease, so if you don’t ask about getting a better deal you’ll never know! If you are struggling to pay your energy bills, get in touch with your provider and explain your situation.
Access a payment plan: Most of the major energy retailers in Australia have payment plans to support customers who are struggling with bill stress. Speak to your provider and ask what type of support plans they offer to keep you connected.
Don’t wait until it’s too late: Yes, the government passed the Energy Price Relief Plan late last year, but the $1.5 billion in assistance to homes and small businesses is unlikely to take effect until at least April 2023. If your bills are becoming unsustainable, look at switching and saving with a different energy provider.
Four tips for lowering your gas bill today
Aside from changing providers, there are some steps you can take right now to help reduce your reliance on gas, which will translate to lower usage – and, hopefully, lower bills.
Much of your gas bill is related to hot water use. One way you can minimise your gas usage is to take shorter showers. You might be surprised by how much you could save by shaving a few minutes off your daily shower.
With most modern gas ovens heating up quickly, why not skip the pre-heating stage altogether? Think about how many times you’ve pre-heated the oven at the start of a recipe, only to pop your food inside half-an-hour later.
If you are looking for a new gas provider, think about going with a fixed-rate plan. This will lock in your gas prices for the length of the contract (e.g. 12 months) so you’ll be immune to further rises.
While it’s a fairly large initial outlay, getting rid of gas altogether and switching to fully electric heating and hot water systems can save you thousands over the years to come. In fact, fully electric households in some parts of the country can expect to save $1899 on their annual energy bills, according to the Climate Council.
Bottom line: While the gas price cap is intended to stop the surging price of energy, relief for consumers is still some months away – and the cap won’t last forever. So make sure you protect yourself by finding a better gas deal with a different provider.
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The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
