The annual July price change is driven by annual changes in the wholesale network charges levied by electricity distributors, which retailers pass on to end consumers in their bills.
Electricity distributors operate under a regulated monopoly—there is only ever one distributor for any property—and the regulations require that any new network charges take effect on 1 July every year.
Retailers generally change their retail prices at the same time or shortly after to accommodate these changes to their wholesale cost base.
Since 2021, the July distributor price change has also affected Victorian prices. Victoria previously had its distribution network price changes, which resulted in retail price changes, in January each year.
All states in the NEM are now aligned with a July price change that will affect all retailers' plans.
The changes can be simple pricing updates to existing plans, but its not uncommon for retailers to take the July price change event as an opportunity to release new plans or to overhaul their suite of plans and prices completely.
It usually takes at least a week for all retailers to release their new plans and prices, and when they do, there's often a knock-on effect as some of them re-adjust their pricing in response to their competitors.
So retail energy pricing is often in flux for at least the first week in July.
Making a switch decision when the prices are changing
The annual price change brings some additional considerations for energy consumers both in the lead up to the price change, and immediately after the price change.
Pre-price-change decision making
Bill Hero updates the database of plans and prices every day, based on the data available from the official source which is the Consumer Data Right - a government initiative which includes requirement for energy retailers to publish details of all their 'generally available' energy plans into a central repository.
The range of plans and prices available change every day, and Bill HEro updates the plans in our system from this repository every day.
Retailers generally do not reveal their prices in advance, so in the lead-up to the July price change, its impossible to know what the price change will be, which makes it harder to make a decision to switch or not.
If you decide to make a switch early, its possible that the plan you switch to might change, and it may be necessary to switch again one the new pricing becomes visible.
If you decide to hold off on making a decision until the new pricing becomes visible, you may just be be elongating the time that you continue overpaying under your existing plan, when there's savings available to you elsewhere.
Our general thinking on this dilemma is that the only party that benefits in delaying a decision when there is a clear saving advantage to be accesses, is your current retailer which gets to overcharge you for longer. Bill HEro makes it easy to identify and act on a switch, and the worst case might be that you decide to switch again in relatively quick succession.
Post-price-change decision making
Immediately after the price change has impacted the market, a different problem can emerge as Bill Hero will compare a bill issued before the price change, against current daily updated prices in the market post price change.
If the price change has been an increase, this will make the legacy bill artificially appear to be more cost effective than it really is.
Bill Hero can handle this situation by recalculating the legacy bill by applying new rates from the price change notice all retailers are obliged to provide before applying the change.