In bad news for your hip pocket, the rising cost of energy looks set to get worse "well before it gets better".
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Financial analyst and Climate Energy Finance director Tim Buckley has forecast wholesale electricity prices to drop to around $70 - in eight years time.
"We can look forward to prices dropping 60 to 70 per cent over the next eight years and, at the wholesale level, which then means retail prices will start to go back down again from after next year," Mr Buckley said.
"Next year will be the worst of it. I hope."
Who is affected?
Anglicare Victoria financial counselling leader Lesley Conway said her team was seeing a "cross-section of people" on low-incomes who were most vulnerable to the flow on affects of energy rises.
"The fact that many are in private rentals, they really are sort of restrained by the equipment that's in the actual property," she said.
"So if it's not a very economical heater, or even a fridge. [Often] people can't afford to buy the most economical [goods].
"They're limited by what the landlord is able to do so they don't really have a lot of capacity to control what's going on in terms of the usage."
Energy supplements are available for recipients of government payments, including pensioners and seniors card holders, but the rate has not been updated since 2014 and is not indexed to grow with inflation.
Seniors advocacy body Australian National Seniors has called for the supplement, which amounts $366.50 for a single pensioner and $550 for a couple per year, to be reformed and increase in line with energy prices.
Chief advocate Ian Henschke said more needed to be done to make energy affordable.
"We hear from many older Australians hit hard with rising cost of living expenses, electricity being only one," he said.
"High electricity prices can lead to older Australians on low fixed incomes being too afraid to run their heaters during winter or air conditioners during summer.
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"This can have a serious health impact on older people who are often more vulnerable to extreme temperatures, and unnecessarily suffer while risking their health during these periods."
Ms Conway agreed she had seen clients take steps to reduce their energy usage and the issue was part of wider cost of living stress for low income earners.
"People are continually making a myriad of daily choices over medication, food, power on, travelling, using the car, all those sorts of things," she said.
"It's a choice, I don't think, that's reasonable for people to make."
Why is the price rising?
The Australian Energy Regulator (AER) sets the wholesale price cap, called the Default Market Offer, which acts as a safety net to protect consumers from unjustifiably high energy prices.
The AER determined from July 1, wholesale costs, which make up about one third of a retail energy bill, should increase for households between 1.7 per cent and 8.2 per cent above inflation.
This resulted in price increases of 41.4 per cent in New South Wales, 49.5 per cent in Queensland, and 11.8 per cent in South Australia since the price-cap last year.
Insights from the AER's latest Wholesale Markets Quarterly report show the increase was driven in part by outages and supply problems with coal-fired generation, and lower than expected generation by solar and wind sources in early wintry conditions, resulting in high energy demand.
The AER will be making a decision about the default market offer for 2023-24 period in May 2023.
How did we get here?
Australia exports 72 per cent of its gas, placing us among the top three global exporters of liquid natural gas alongside Qatar and the US.
Mr Buckley said previous federal governments allowed major gas companies to expand export facilities on the east coast over the past decade and as a result domestic gas prices had "hyper inflated" because Australians were paying for gas in an international market.
Western Australia requires producers to reserve 15 per cent of gas for the domestic market.
"Looking at the difference in Western Australia versus eastern Australia, Western Australia has a gas reservation policy put in place 15 years ago," he said.
"In the east coast, up until 2015, we had no gas export capacity at all in eastern Australia and so for 50 years, we had a domestic only market ... we had no volatility, no inflation."
More recently, the Russia-Ukraine war has seen countries ban gas imports from Russia, increasing the scarcity of the fossil fuel and further driving up prices.
A jump in gas and coal prices has flow-on effects for the price of electricity as both fuels are used in the generation of electricity in coal-fired and gas-fired power stations.
Mr Buckley said a decease in price will come as the federal government moves towards meaningful investment into energy grids to handle renewable energy.
"Grid investment won't do anything for wholesale prices per se, they will in fact, increase them but what it does is unlocks a whole lot of new zero emissions capacity investment and that increase in supply reduces prices for everyone in Australia," he said.
If you are experiencing energy stress, there is help available. See Anglicare's financial services here.
