It's never fun to receive a utility bill so it's understandable if you weren't happy on hearing last week that electricity and solar feed-in tariffs, or prices, are about to shoot upwards.

The surge won't be felt everywhere but NSW, south-east Queensland and South Australia will feel the effects of the change, as will small businesses across the country.

Why?

Read on to find out more.

What is DMO?

You've heard us mention the Australian Energy Regulator (AER) before and the peak electricity and gas industry body is key to the upcoming tariff changes.

Under the umbrella of the federal government, the AER essentially regulates and sets the Default Market Offer (DMO) for NSW, south-east Queensland and South Australia.

The DMO is a capped figure that on the one hand, aims to ensure both residential households and small businesses don't get stung by greedy electricity providers.

According to the AER, the DMO is "an annual price representing the amount a typical customer can expect to pay for electricity over a year" and is "intended as a fallback option" for people who don't wish to shop around for energy comparisons and providers.

However, the DMO is also there to encourage electricity providers to "make a reasonable profit and enable competition and market engagement".

So, in essence, the DMO is there to protect consumers while assisting electricity providers.

If you think this is confusing, if not to say very tricky, the past week's actions by AER go a long way to proving just how fine a line the DMO is based on.

What does this mean for my electricity bill?

Simply put, your electricity bill will increase from July 1 - depending on where you live, of course.

NSW's residential consumers can expect an up to 18.3% annual hike while those in southeast Queensland will see up to 12.6% surges, and South Australians, don't be surprised by a 9.5% jump.

Small businesses in NSW should prepare for a 19.7% rise while those in southeast Queensland and South Australia, you'll most likely see an increase of 14.7% and 5.7% respectively on your bills.

By the way, Victorians - don't breathe a sigh of relief yet as your state government has also just introduced its own form of AER's DMO.

A 78-page document delivered on May 24 declared both residential households and small businesses will see a 5% increase on their electricity bills.

How did AER make this decision?

We'll tell you what AER said and leave you to make your own judgement on their decision.

AER stated that it examined all the different costs involved for energy providers when supplying electricity including needing to purchase wholesale electricity, and network and government costs.

It then included a ‘retail allowance’ for these factors while pointing out that there were higher than expected wholesale costs in DMO regions, especially NSW and Queensland.

"Factors contributing to this (higher cost) include unplanned generator outages, higher coal and gas costs, and increasingly ‘peaky’ demand driving up the cost of energy contracts for retailers," the AER said.

The industry body emphasised that the wholesale market conditions have been compounded by the ongoing war in Ukraine, which has led to significant pressure on coal and gas prices globally.

As well, recent extreme weather conditions in NSW and Queensland affected coal supplies and electricity demand along with further unplanned outages at multiple generators.

AER chair Clare Savage also acknowledged that this year’s DMO "determination" was a particularly difficult decision, with the regulator seeking to balance the additional cost pressures on consumers with ensuring retailers could recover their rising wholesale and network costs.

“Our safety net DMO price will continue to protect consumers from unjustifiably high prices and will continue to provide the reference point from which consumers can shop around for a better deal," Ms Savage said.

So, what should I do now?

Well, the good news is that you may not be affected by these power increases at all, even if you do live in one of the three above areas.

In fact, only 7.8%-10.7% of residential consumers in these areas will experience bill uptakes while 15.7%-19.8% of small businesses won't be bothered with this issue.

However, if you're unsure about where you stand with the upcoming changes, we've got the perfect plan for you!

We're here to help

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Now, more than ever is the time to compare your energy providers and deals, and wherever you live, we can help you find great energy savings and concessions, sort out all these odd details on your bills that you can't understand and much more - and this includes examining solar opportunities.

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