Here are the most common questions (and answers) about changes to our energy rates.

Why is there information on my price variation letter about another energy plan?

It’s to meet a new regulation that was rolled out in July 2019. 

In Victoria, energy retailers must now regularly tell customers like you about their cheapest generally available energy plans. Your energy retailer also has to tell you how to access these plans and where you can go to compare offers from other retailers. All this info has to appear on any notices about changes to your energy prices or plan benefits, and on your bills.  

I’ve just seen news reports that power prices are coming down – what’s going on?

You may have read or heard news reports stating that electricity prices will decrease over the next three years.

These news items cite the Australian Energy Market Commission’s 2019 Residential Electricity Price Trends report.

This report predicts that annual power bills will start falling from the 2020–21 financial year, primarily as a result of significant increases in generation capacity which are expected. However, this expected increase in generation capacity hasn’t arrived yet and as such the report predicts that this decrease won’t happen in the current financial year, in which prices are set to increase in all states but Queensland.

Our price changes on 1 January 2020 are consistent with the Essential Services Commission’s decision to increase the average price of the Victorian Default Offer by 7.8 per cent – primarily because of increases in wholesale energy and “poles and wires” costs.

At Momentum, we strive to provide our customers with competitively priced energy and we look forward to working in an energy landscape where increased generation provides downward pressure on energy rates.

How do you work out how much I could save by switching plans?

This involves a few calculations (maths-haters, brace yourself).

1. What will you pay if you stick with your current plan?

Firstly, we look at your past energy usage for the past 12 months (if you’ve been with us for less than 12 months we’ll use an estimated figure based on your recorded usage), and use this to calculate the estimated annual minimum cost for your future rates – the rates that apply after the price change has happened.

2. What will you pay if you move to the cheapest option we have for you?

Then we use the same 12-month usage figure to work out the annual total cost of our deemed best offer. This gives us the minimum amount you’d pay if you were on our lowest-cost offer instead.

3. What’s the difference between these?

Now we can show you the difference between the annual cost of the cheapest plan we could offer you and the cost of your current plan (after the new rates kick in). This difference is an estimate of what you’d save by switching to our lowest-cost offer.

What’s the Victorian Default Offer?

Set by the Essential Services Commission (ESC), the Victorian Default Offer (VDO) is the price all Victorian electricity retailers must give residential and small business customers on standing offers #. Additionally, customers on market contracts can move onto the VDO if they request to.

From 1 January 2020, the VDO covers all standing offers, including those based on time-of-use, demand, and flexible tariff structures.

The ESC has made the decision to increase the price of the VDO by an average of 7.8 per cent, commencing 1 January 2020.

# The VDO doesn’t currently apply to embedded network customers.

Why is the VDO going up?

The Essential Services Commission decided to increase the price of the Victorian Default Offer (VDO) by an average of 7.8 per cent, commencing 1 January 2020. In stating its decision, the Essential Services Commission confirmed that increases in wholesale energy and “poles and wires” costs were overwhelmingly responsible for the price increase.

I’m on a market offer, why are my energy prices going up?

Like all retailers, each year we review the costs involved with supplying energy to our customers. When we review these costs, we typically look at these four areas:

  • Wholesale energy costs (the cost of generating the energy)
  • Network distribution costs (the costs of transporting that energy from the generator to the user)
  • Government environmental schemes
  • Retail costs (the cost to service customers).

The costs associated with any of these factors can change. When they do, this has a flow-on effect to what we charge our customers.

How much are electricity prices increasing by?

Our review of the costs associated with delivering your electricity will result in an increase in the price we charge many of our customers. This price increase will take effect on 1 January 2020, and is in line with the decision by the Essential Services Commission (ESC) to increase the price of the Victorian Default Offer (VDO) by an average of 7.8 per cent. Our average price increase will be approximately 8 per cent.

However, Momentum’s 1 January price increases will still see our non-VDO electricity customers priced, on average, 5-6 per cent below the VDO.

Why do electricity costs increase differently for different customers?

The reason electricity prices and the VDO may increase at different rates for different customers is based on a number of factors, including:

  • the customer’s location on the network and the distance electricity is transported through the network; and
  • the particular tariff that applies to each customer, such as time-of-use tariffs.

It is possible that some of our customers will see price increases that are more or less than the average increase in the VDO and in Momentum’s retail prices.

Why have we changed our time-of-use tariffs (that include peak, off-peak and shoulder)?

The ESC has introduced the VDO for time-of-use customers.

Momentum has made a decision to change all of its time-of-use price structures to achieve greater consistency with the VDO assumptions and tariff structures. These changes may result in some of our retail customers experiencing significant changes in their annual bills if their usage profile is significantly different from the assumptions in the time-of-use VDO.

For example, one Momentum Energy time-of-use tariff had relatively high daily charges but very low off-peak rates. The VDO time-of-use tariff has a much lower daily charge, but higher off-peak rates. From 1 January 2020, Momentum will align its rates with the VDO structure, which could mean significant increases for some customers, according to how and when they use their electricity.

Gas price increase

Momentum Energy’s gas customers will see an average price increase of 4.4 per cent.

What are wholesale supply costs?

These are the costs we incur from buying electricity and gas from generation/production companies. These costs are a major influence on the rates we charge customers for the energy they use.

Why have I received a price variation notice when I’m yet to receive my first bill?

All Momentum customers are subject to price increases and we can apply these provided we give notice of the change as specified in your contract. It is worth noting that the new rates don’t come into effect until 1 January 2020 and as bills can arrive at any time, you may still receive a bill before your new rates come into effect.

What are network distribution costs?

These are the costs associated with moving energy from power plants to homes and businesses. Essentially, it’s what network distribution companies charge to cover the maintenance and upgrading of their networks of poles and wires, or gas pipelines. These network distribution costs are incurred by Momentum and then passed through to our customers.

What are government environment schemes?

In Australia, there are a number of state and federal government schemes designed to promote renewable energy and energy efficiency. For example, in Victoria there’s the Victorian Energy Upgrades (VEU) program, which aims to deliver more affordable energy efficiency improvements for Australians, so they can cost-effectively save energy in the long term.

What are demand rates?

Demand rates are an additional charge that is applied to a customer’s account based on their peak electricity demand (kW) on the network. Demand rates are charged by a customer’s local network distribution company (they own the poles and wires that bring electricity to properties), as a way of helping reduce electricity demand, and therefore the demand on the network, during high usage periods. 

My new rates say that Peak 1 and Peak 2 are the same. Is this right?

Yes, it is. We’ve made our Peak 1 and Peak 2 rates the same, to align with the costs we incur from distributors (as they usually charge a single peak rate).

Previously, Peak 2 applied when a customer’s daily usage exceeded a certain amount – if you’re wondering if you used to be charged Peak 2 rates, just check the usage on your past bills.