It’s not quite as bad as feared from earlier reporting but it’s hardly lighting it up, either:
The price for residential customers without controlled load in SE Queensland is $2,022 which is an increase of 2.7%. For customers with controlled load, the price is $2,363, which is Default market offer prices 2024–25: draft determination unchanged from DMO 5 (these amount to decreases of 0.6% and 3.3% below forecast inflation).
In South Australia the price for residential customers without controlled load is $2,222, a reduction of around 2.5% since DMO 5 (5.8% below forecast inflation). Those with controlled load face a price of $2,773, which is a 0.5% decrease (3.8% below forecast inflation).
In NSW, residential customers without controlled load will see prices of $1,773 to $2,549 which range from a decrease of 3% to an increase of 0.9% (6.3% to 2.4% below forecast inflation) compared with DMO 5, depending on their distribution network region. Customers with controlled load will see prices of $2,476 to $2,964, amounting to decreases 0.4% to 7.1% (3.7% to 10.4% below forecast inflation).
For small business customers, prices will be between $4,191 and $5,802. Compared to DMO5 these prices represent a 9.7% decrease to a 0.7% increase (13% to 2.6% below forecast inflation) depending on their region.
Here’s the excuse:
Wholesale market costs are one of the largest components of the DMO prices comprising around 40% of the DMO. Conditions in wholesale markets have stabilised significantly since DMO 5.
For example, as at February 2024, base futures contract prices have fallen by between 44% and 51% compared with their respective highs in October 2022.
However, as retailers were purchasing some contracts for the DMO 6 period during the high priced period, the trade weighted average contract prices have not fallen as dramatically as the point-intime comparison suggests.
This progressive accumulation of contracts is how retailers manage price risks for future periods but it also results in a lag in changes in contract prices being passed on to consumers.
So, there are more cuts to come, but the basic point about whether the DMO is still fit for purpose remains.
Why are consumers responsible if some retailers mismanage their forward contracts?
Put simply, what is the point of a default offer to contain prices for low-income consumers when, in effect, it pads power retailer margins?
