ECONNEX

Why have Energy Prices Risen?

Uncover the reasons behind the recent surge in energy prices. Explore the factors influencing the rise in costs.

The Burden Of High Energy Prices

Published on 22/08/2023

By Rajesh Kumawat

Energy Comparison

In Australia, it has become scary to think of your next energy bill even before it is due. With people carefully and dreadfully checking their mailboxes to see if there is mail from the energy company or not, something needs to be done about this.

Over the years, domestic power bills have increased in value to a great degree and there are no hopes of this increase coming to an end anytime soon.

According to a fact sheet published by the Department of Environment and Energy, it was stated that there are four major reasons for the constant increase in electricity bills and they are: environmental costs, cost of generating electricity, electricity company costs, and the costs of fixing poles and wires. Although all these are the main reasons why there is a hike in the price of energy, it may not sound like a sound explanation to those who are carrying the burden of paying these bills.

With little hope that there might be a change or that the state of energy prices will get more bearable, most Australians need to find how to deal with this burden. Even though the reasons behind these price hikes might not be fully understood by consumers who are paying the bills may not fully understand the reasons behind these price hikes. These are some of the reasons;

  • The high cost of generating electricity over the years, there has been an increase in the prices of coal, and gas which are the main sources of generating energy. This increase in gas and coal prices has made the rise in the wholesale price of power a necessary evil because, without coal or gas, energy cannot be produced. And if the raw material is expensive, then the end product will also be expensive. Also, coal power plants that are not functioning effectively as they used to have been shut down, and this has caused a layback in the production rate of energy and the amount of energy produced.
  • The costs of fixing poles and wires Australia is one of the countries with the longest electricity networks in the world and this can cause an increase in the costs of wires and poles. With the need to use wires and poles to transport these energies into homes, and maintain these poles and wires from faults over time, it is reasonable to think that the price of electricity will be affected. These costs are not only high but cover about half of the whole residential energy price.
  • Costs of environmental affairs These costs are dependent on each state, and they make up the smallest ratio of the whole wholesale energy cost. They include the cost allocated to meeting the national renewable energy target, and also the costs of rooftop solar power support schemes in the country.
  • The marketing and administration costs of the electricity company it is from these costs that the workers are paid, and also, the marketing of the company’s financial wellness are financed. This cost is about a quarter of the whole electricity bill, and it is how customers' databases and office maintenance costs are taken care of.

Looking at all the above reasons, it is obvious that the increase might just be because of factors that are beyond these companies, and therefore something needs to be done individually about the energy situation.

What are the things that can be done to reduce the hike in energy prices?

  • Concentrating more on clean energy sources such as solar energy for individual homes and offices will really help to reduce the bills. Since solar power only needs to recharge itself using solar energy, this will reduce the electricity bills that each household needs to pay.
  • It is important to try and cut electricity consumption to a minimum rate. You have to be deliberate about your electricity usage and try not to waste it or use it when it is unnecessary. This will reduce the demand for electricity which will also reduce costs.
  • Also, there are different technologies that allow energy storage for homes and offices. You can get batteries that store up energy when there is a power supply and then use the energy stored in batteries at later times while reserving electricity.
  • It is also advisable to seek the professional advice of your current energy provider on any better deal that will be suitable for your needs and then opt for it if it is indeed suitable. Compare with Econnex to see if you can save.

You should try to find a solution to your energy bill problems before it starts to consume you. There are various bills that you will need to pay for the house and it is more of a burden if most of the allowance allocated for bills is going into electricity.

Energy Comparison
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