Energy rebate: Not much, but it’s a start

Article published 16 May 2024

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Every household in Australia will get a $300 energy rebate over the next financial year. Some people need it much more than others.

As part of the latest Federal Budget, the Treasurer has announced a $300 energy rebate that will go to all Australian households starting from July 1.

According to the announcement, the energy rebate will be applied automatically as a credit towards each household’s electricity bill. The credit will be paid in quarterly installments over the year. This means that every household will receive $75 towards their power bills every 3 months from July. The rebate will be credited to the billpayer, so renters will get it too.

For people struggling with cost-of-living pressures and rising expenses across the board, it’s a case of ‘every little bit helps’.

But ‘little’ is the watchword. In December last year, the average quarterly electricity bill in New South Wales was $345. After the energy rebate, these bills would still be $270 per quarter.

Equal, but not necessarily fair

While the energy rebate is paid equally to every household, it won’t go as far for some people. For people with energy inefficient homes, people who live in share houses or multifamily homes, and people who cannot afford rooftop solar or energy saving devices, the rebate will cover only a small portion of their bills.

On the other hand, for those households who live in more efficient homes or can bring down their bills with solar panels and energy efficient appliances, the rebate will have a much bigger impact on their energy costs.

The problem is, many of the households are already well off, yet they’ll get the same $300 energy rebate as the households that are struggling the most.

The Treasurer defended this approach by saying that this was the simplest way to deliver bill relief to all those who need it. He argued that, because the energy rebate is delivered through electricity retailers, the Government would have to design a whole new system to provide retailers with household income information if the rebate was targeted to people below a certain income threshold. That complexity would also add cost to the program.

Fair enough. But the Government could have provided additional relief to low income households by extending last year’s Energy Bill Relief Fund. That policy gave a one-off $500 energy rebate to concession card holders and Commonwealth Seniors Health Card holders.

The Government could have added to it, but they chose not to. And as the Executive Director of The Australia Institute keeps reminding us, budgets are all about choices.

Check with your retailer

While $75 per quarter will no doubt help, there are other ways that people might be able to reduce their electricity costs. Electricity retailers in much of Australia are limited in how much money they can charge customers by something called the ‘default market offer’ or DMO.

Every year, the Australian Energy Regulator sets the DMO to ensure that electricity customers don’t get ripped off by their providers. The Regulator is in the process of finalising the new DMO now, which will come in to effect on July 1 and should bring electricity prices down for many households.

Most electricity retailers will also offer lower prices than the DMO to attract customers.

However, these deals usually expire after a certain amount of time. When this happens, customers are usually moved onto a ‘standing contract’ where they end up paying the DMO.

But sometimes cheaper electricity plans are available, even with the same retailer. The Australian Competition and Consumer Commission (ACCC) recommends that people get in touch with their electricity retailer to ask about cheaper plans and to make sure they’re getting the best deal.

In addition, the Government has an online comparison tool called Energy Made Easy that helps people compare their energy bills with competing offers to save money. You’ll need some info from a recent electricity bill to use the website.

Finally, NSW residents can check to make sure they’ve received the existing rebate. For concession card holders, more information on the NSW Low Income Household Rebate can be found here. For Commonwealth Seniors Health Card holders, there’s more info on the Seniors Energy Rebate here.

The Government’s latest energy rebate is a start, but more needs to be done for people doing it tough.

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