“Thanks for being with us — but it’s important you switch to another retailer now”.
New Zealand energy company ReAmped Energy has over 70,000 Australian customers and yet this was the message that they sent to those customers on June 1.
The reason they give is that they simply cannot keep up with the demands of the market and are being forced to pass the costs of wholesale energy onto their customers in order to stay afloat. Not wanting to make things harder, ReAmped is instructing everyone in Australia to shift onto a different energy plan as soon as possible.
“If you stay with ReAmped, your bills could double in the days and weeks ahead,” Luke Blincoe, Chief Executive of ReAmped wrote in an email to their customers.
“We understand that many Aussie families are already experiencing cost of living pressures and the last thing we want to do is contribute to this more than necessary”.
It’s not an unfamiliar picture, although it is a refreshingly honest one. Across the country right now, energy retailers are being squeezed by market fluctuations and this is resulting in higher bills for consumers.
ReAmped warns that energy prices, which have been steadily climbing since March, are about to increase dramatically. We’re currently in the bizarre situation where wholesale energy prices are currently more expensive than the energy these buyers are selling to their consumers. This is because they know that they can’t keep putting bills up without losing some or even all of their customers, but given the steady and unrelenting climb, there’s only so long they can hold out for before raising bills.
That time appears to be coming and part of the reason why the market is so turbulent right now has to do with the way that it’s structured.
Australia has a ‘big three’ of energy suppliers; AGL, Origin, and Energy Australia. Between them, they represent some 82.4% of the energy market, with smaller retailers making up the rest. Because the vast majority of the energy sold by the big three comes from gas or coal, many consumers have been turning away from them and towards smaller, renewable firms.
The issue is, though, that the big three actually produce energy. They own the coal or gas-fired power stations that the energy comes from. Smaller retailers, like ReAmped, typically don’t produce anything. Instead, they buy whatever energy is traded on the market, trying to get the cheapest prices for their customers.
Because of this, they are almost entirely at the mercy of the market and economists fear that many of them could go bust if prices continue to rise.
The best thing that consumers can do right now is to seek out another energy provider, if they’re with a smaller company, or attempt to get a fixed-rate energy contract now. As prices are predicted to rise, on a fixed-rate, you’re likely to end up paying more in the short term but less in the long term.
In order to compare plans, the federal government has an ‘Energy Made Easy’ comparison site that compares energy plans in NSW, the ACT, TAS, SA, and QLD. If you’re in Victoria, you can use the state government’s Energy Compare tool instead.
The situation is WA and the NT is a little bit more complex as there are far fewer providers, so make sure you do your research here. The good news is though, with fewer players, the companies are bigger and likely more able to weather the storms of price rises without passing on too much of the cost to consumers.
If you’re already on a fixed-rate, check when it runs out and whether you can extend it now to ensure you’re getting the best price for the long term.