Electricity prices: What's the answer?

There have been a couple of questions that have been on every household's mind in recent years. Why are electricity prices rising? Will they keep rising? How can I keep up?

It has been a tough environment for consumers of late, with many households struggling to pay bills on time or at all, regardless of their stage of life or employment. The elderly have proved particularly vulnerable as they are less likely to be aware of helpful tools such as electricity comparison services or government assistance schemes, but no group of society has been immune from the prices.

However there are some signs of hope, such as the recent recommendation from the Australian Energy Market Commission (AEMC) that New South Wales remove its retail electricity price caps to allow for increased retail participation and competition, giving consumers greater options.

In terms of why electricity prices have been rising, according to Tim Wolfenden of Make It Cheaper, there are town main reasons.

"One is the need to increase investments in the distribution networks in the country," he said. "The other one is the increase in the prevalence of environmental charges and taxes, which are levied onto consumers."

Mr Wolfenden explained that in the end, renewable technologies such as solar power are the ultimate solution to electricity prices, however at the moment because of the way the government has implemented levies and taxes for renewables, the consumer is bearing some extra costs.

"Unfortunately what's happened on a number of instances is renewables have been funded through government grants and consequently taxed or paid for indirectly through all consumers' bills. It hasn't been done particularly well," said Mr Wolfenden.

"The opportunity we have with solar power in this country is to establish a large scene of microgeneration across metropolitan and regional communities and what the government needs to focus on is understanding the best way to support the investment in the installation of those solar products."

Mr Wolfenden said that if the government gets that right, then solar power systems should pay themselves back within five to ten years.

In the meantime, with electricity prices still a challenge for many, consumers need to stick to the basics, which are use less power and pay less for what you do use. That means finding ways to be more energy efficient around the home, as well as seeking out the best possible deal from electricity retailers.

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