National

The 'stealthy' price-setter of Australian energy bills

Feb 25, 2026

Gas — The cost of gas is a big driver in energy bills for Australian households. -AAP Image

Expensive gas, unreliable coal plants and a retailer "loyalty tax" are the primary drivers of Australia's soaring power bills, a climate think tank report says.

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While the Climate Council analysis largely blames fossil fuels for wholesale spikes, it also exposes systemic retailer misconduct.

Fourteen energy companies breached consumer laws in the past 12 months alone, costing Australians nearly $55 million through overcharging and misleading conduct.

The report told a "pretty troubling story", co-author Joel Gilmore said.

Beyond legal breaches, millions of customers are being penalised for staying with the same provider, with the "loyalty tax" costing the average household hundreds of dollars extra per year.

"We really should be putting our retailers on notice that we all expect better," Dr Gilmore told AAP

Australian households and businesses have been paying more for electricity over the past five years, at the same time as energy users have been promised lower bills from renewables replacing coal.

Understanding this contradiction was the goal of the report, Dr Gilmore said.

The CSIRO maintains renewables and storage are the cheapest substitutes for coal stations, which are old and would need replacing at great expense anyway.

Yet as the transition has been unfolding, gas plants - used during times of peak demand, such as in the evening - have become expensive to run.

Gas sets the price for other generation types up to 90 per cent of the time, despite only contributing five per cent of total power.

Gas prices surged after Russia invaded Ukraine in 2022 and despite having an abundance of the resource, Australians are paying the elevated global price because the bulk is shipped overseas.

Multinational gas companies had made close to $100 billion in extra revenue since Ukraine was invaded, energy expert Greg Bourne said.

"Gas is the stealthy price setter, tethering our household budgets to volatile and high-cost global markets," he said.

Australia's ageing fleet of coal-fired power stations are also drivers of higher prices as they are prone to breaking down, leaving the grid reliant on gas.

Other drivers of high power prices include a period of overbuilding poles and wires influenced by a state government outage fears.

Renewables are also helping to meet Australia's climate commitments, Energy Minister Chris Bowen confirmed on Wednesday, with record-high solar and wind contributing to the 1.9 per cent emissions reduction over the year to September 2025