David Koch has issued a cautionary note to millions of Australians, warning them to prepare for a potential increase in their electricity bills, which could exacerbate the already challenging cost-of-living situation.
Later this month, consumers will gain clearer insight into the future of energy prices when the Australian Energy Regulator and Victoria’s Essential Services Commission release their draft default market offers. These offers serve as benchmark rates that influence the majority of standing-offer contracts.
According to the economic director of Compare the Market, families hoping for significant financial relief might find themselves let down. Despite some positive shifts in the wholesale energy market, which suggest a stabilization of prices, Koch believes this optimism might be premature.
“Australians deserve some relief, and I would argue that prices should stabilize,” Koch stated, citing encouraging signs of reduced pressure in the wholesale sector. He noted that the benefits of solar energy adoption should eventually contribute to reducing retail costs.
However, he offered a word of caution: “Unfortunately, that’s just part of the picture, and the reality is we shouldn’t be lured into a false sense of security just yet.”
‘Unfortunately, that’s just part of the picture, and the reality is we shouldn’t be lured into a false sense of security just yet.’
Ageing infrastructure, surging network costs and the shift to renewable energy have been blamed for putting upward pressure on power bills.
Koch said inflation remained ‘sticky’, with higher fuel, transport and material costs pushing up the operating expenses required to maintain and replace poles, wires and meters. Labour and construction costs tied to grid upgrades are also rising.
David Koch has warned Australians to brace for more cost-of-living pain over fears electricity bills could soon increase
‘As we’ve seen in the past few months, we are not out of the woods when it comes to inflation yet, and turmoil in the Middle East could put even more pressure on resources globally,’ he said.
‘Factor in our dated infrastructure, transformation plans, network costs and big operating outlays, and it’s a much murkier situation.’
Electricity demand is expected to surge in coming decades, with forecasts national consumption will almost double by 2050 as more households buy electric vehicles, shift from gas to electric appliances, and as emissions‑intensive industries electrify.
At the same time, extreme heat events are pushing evening peak demand higher – precisely when rooftop solar output collapses.
While the long‑run solution remains accelerating the build‑out of renewables and storage, the benefits will take time to reach households.
A recent AEMC report found faster deployment of renewable generation is critical for reducing wholesale prices, but warned that if investment stalls, retail bills could rise by as much as 13 per cent between 2030 and 2035.
Comparison site Finder estimates households in South Australia are currently paying the highest quarterly bills at $468, followed by NSW ($440), Queensland ($420), Victoria ($351) and Western Australia ($260).
The evolving mix of home technologies – from EV chargers and heat pumps to batteries and smart appliances – is also reshaping consumption patterns, placing new stress on networks designed decades ago for one‑way energy flows.
Electricity demand is expected to surge in coming decades with forecasts national consumption will almost double by 2050 (stock image)
While consumers have little control over the structural drivers of price increases, Koch said many households can still cut costs by switching retailers.
‘Last year, 80 per cent of people with the power to switch were spending more than they needed to,’ Koch said.
‘Prices vary – even with the same retailer. If you haven’t switched in three years or more, the ACCC says you’re spending an average of $221 more than new customers. That’s a pretty compelling reason to shop around.’
There are some encouraging signs at the wholesale level.
AEMO executive general manager of policy and corporate affairs Violette Mouchaileh said wholesale electricity prices almost halved in the December 2025 quarter, largely due to record renewable generation, which supplied more than half of total NEM demand for the first time.
‘It reflects years of sustained investment, and demonstrates that more wind, solar and battery capacity reduces reliance on higher‑cost coal and gas generation,’ she said.
‘That puts sustained downward pressure on wholesale prices.’
However, industry analysts caution that network and retail costs – which make up the bulk of a household electricity bill – continue to rise even as wholesale prices fall.
For now, it means households may have to wait longer before any of the benefits of the energy transition flow through to their bills.
