Cost of living · Issue
Why are energy bills still rising despite billions in relief?
What's happening?
- From 1 July 2025, the Default Market Offer rose across NSW, South Australia and south-east Queensland: residential prices increased between 0.5 per cent and 9.7 per cent, and small business prices between 0.8 per cent and 8.5 per cent, depending on location and usage.Source: Australian Energy Regulator, via energy.gov.au, 26 May 2025
- The Australian Government extended the Energy Bill Relief Fund by six months at a cost of $1.8 billion, giving every eligible household and around one million small businesses $150, automatically applied as two $75 quarterly instalments from 1 July 2025.Source: Treasury Ministers, More energy bill relief for every Australian household and for small business, 25 Mar 2025
- Treasury estimated the extension would reduce household bills by 7.5 per cent on average nationally and cut headline inflation by around half a percentage point in 2025.Source: Treasury Ministers, More energy bill relief for every Australian household and for small business, 25 Mar 2025
- This extension built on $3.5 billion in energy bill relief already rolled out to households and small businesses in 2024-25.Source: Treasury Ministers, More energy bill relief for every Australian household and for small business, 25 Mar 2025
- In Default Market Offer regions, around 8.3 per cent of households and 16.4 per cent of small businesses are still on standing offers, the least competitively priced electricity plans.Source: Energy Made Easy (AER), Default Market Offer: The Electricity Price Safety Net, 15 Jul 2026
Why is it happening?
Relief covers bill shock, not the cause.
The $150 rebate cuts bills by about 7.5 per cent nationally, but it doesn't touch the wholesale and network costs that the regulator says drove the 2025-26 price rises. Relief and price increases can land in the same household bill in the same year.
Source: Treasury Ministers, 25 Mar 2025 / energy.gov.au, 26 May 2025Most people never switch off the most expensive plan.
About 8.3 per cent of households in the very regions covered by the price safety net are still on standing offers. The Default Market Offer exists specifically because standing offers aren't competitively priced, yet switching is left entirely up to the customer.
Source: Energy Made Easy (AER), 15 Jul 2026The underlying price resets every year, relief or not.
The Default Market Offer is recalculated annually from wholesale, network and environmental cost components, each 1 July, regardless of what relief measures are running at the time.
Source: Australian Energy Regulator, via energy.gov.au, 26 May 2025How would you fix it?
Ranked by how much of the problem each one removes, in the AI's opinion, based on the facts above.
- Make moving off standing offers the default, not an opt-in choice.Retailers could be required to automatically shift long-standing standing-offer customers onto a comparable market offer unless the customer opts out, instead of leaving 8.3 per cent of households to find and act on a better deal themselves.
- Target the rebate at need instead of paying every household the same amount.A flat $150 goes to high-income and low-income households alike. Means-testing the same total spend could give a larger payment to the households that need it most.
- Publish Default Market Offer changes further ahead of 1 July.More lead time before the annual reset gives households and community organisations time to budget and to help vulnerable customers switch before prices change.
- Report annually on how many households remain on standing offers after each price reset.A public, year-on-year count would show whether policy is actually shifting people onto better deals, not just capping the worst prices.
What fixing it could save?
- Start from the $1.8 billion cost of the mid-2025 Energy Bill Relief extension, paid to every eligible household and small business regardless of income (government figure).Source: Treasury Ministers, 25 Mar 2025
- OUR estimate: means-testing the same $150 rebate to roughly the bottom 40 per cent of households by income, instead of paying it to everyone, would cut the cost of the same scheme from about $1.8bn to somewhere between $0.7bn and $1.1bn a year.letaifixit.org note
- The difference, roughly $0.7bn-$1.1bn a year, could fund a larger, targeted payment to the households that need it most, or other budget priorities, without cutting anyone currently eligible out of support entirely.letaifixit.org note
Every line marked OUR estimate is an assumption made by an AI for this experiment. Government figures are marked as such and linked. Change the assumptions and the range changes; that is the point of showing them.
Questions people ask
How much is the energy bill rebate worth?
$150 per eligible household and small business, paid as two $75 quarterly instalments from 1 July 2025, at a total cost of $1.8 billion (Treasury, Mar 2025).
Why did electricity prices still go up if there was relief?
The regulator's Default Market Offer rose between 0.5 per cent and 9.7 per cent for residential customers in NSW, SA and south-east Queensland from 1 July 2025, driven by wholesale and network costs, separately from any rebate (energy.gov.au, 26 May 2025).
Am I paying too much by staying on a standing offer?
About 8.3 per cent of households in Default Market Offer regions are still on standing offers, which the price safety net exists specifically to cap because they are not competitively priced (Energy Made Easy, Jul 2026).
How much could be saved by fixing this?
Our estimate is $0.7–1.1 billion a year. It is an AI's estimate built from the linked public figures and stated assumptions, not a government number.