Ever wondered why your electricity rates seem to change every year? You’re not alone.

Most consumers will have an annual rate change. This is because most Australian energy retailers review and update their prices annually, due to a combination of rising costs and external market factors.  

Let’s break down why this happens, what drives these changes, and how Flow Power is doing things differently this year. 

What drives annual electricity rate changes?

Like other household costs, the price of electricity is influenced by a broad range of factors. If these factors push up the costs of electricity, it can ultimately affect what retailers pay for power. At the same time, retailers buy electricity on the wholesale market, where prices can swing every few minutes based on supply and demand. Both the long-term cost pressures and the changing costs of managing these short-term wholesale movements together drive annual rate changes.  

Factors that influence wholesale prices can include (but not limited to): 

• Weather: Extreme weather events like heatwaves or cold snaps have a big impact on electricity prices. When temperatures soar in summer, more people use air conditioning to stay cool. In winter, heaters are switched on across the country. This surge in demand means power stations have to work harder, and more expensive generators are often replied upon to meet the extra demand. Because the wholesale electricity market works on supply and demand, this increased demand pushes wholesale prices up.. Even if you’re not using more power in these periods, the overall strain on the grid can lead to higher rates for all customers if their retailers pass through these higher wholesale prices when they update their rates. 

• Fuel costs: The cost of generating electricity depends heavily on the price of fuels like coal, gas, and even renewables. Coal and gas are expensive commodities, and their prices can swing wildly due to global market changes, supply shortages, or increased export demand. When these prices rise, it becomes more expensive for power stations to produce electricity, and those higher costs flow through the wholesale market – meaning retailers pay more and may need to increase the rates they charge customers.
  
  Renewable energy sources like solar and wind are changing the game. Unlike coal and gas, wind and sunshine are free, which means wind and solar powered generation can produce power at very low prices.. Plus, renewables generate power without the harmful emissions that come from burning fossil fuels, making them better for the environment and our health. At Flow Power, we support Australia’s transition to a cleaner, greener grid by virtually linking customers to local renewable generators. When you use more energy when renewables are abundant, you’re not only lowering your costs but you’re also helping create a more sustainable energy system for everyone. 

• Network: To allow electricity to reach your home, there is a complex network of poles, wires, substations, and other infrastructure. To keep this system reliable and safe, it needs regular maintenance, upgrades, and sometimes expansion to meet growing demand or support new technology. There are costs associated with maintaining this infrastructure and funding its expansion.  The companies that manage the network recover these expenses through network charges, which are included in your electricity bill. When major upgrades or expansions are needed, these charges can rise – resulting in higher rates for customers. 

• Government Policies: Government decisions can have a significant impact on electricity prices. For example, regulations could  set renewable energy targets. While these policies can help with creating a cleaner, more sustainable future, they can also lead to extra costs for energy producers – such as investing in new technology or purchasing carbon credits. These additional expenses are often passed through the supply chain and can result in higher rates for customers.  

Changes in taxes, subsidies, or market rules can also influence what you pay for electricity.

What’s happening in FY26?

This year, wholesale electricity prices have continued to rise across much of Australia, driven by ongoing market pressures and increased demand. This extra cost for retailers has resulted in many retailers increasing their rates for households and businesses. (For more on recent price trends, see the AER’s latest State of the Energy Market report.) 

Here’s the good news: Flow Power’s base rates are not changing for FY26. 

While many other retailers are passing on price hikes, we’re keeping our Flow Home base electricity rate steady for FY26. We want the electricity market to work for you, and that means setting you up for success with a fair base rate and the opportunity to reduce this rate when you shift your energy use.

With Flow Home, you have the opportunity to influence what you pay for electricity through our Price Efficiency Adjustment (PEA) which is a variable line item on your bill that reflects how price efficiently you use electricity relative to the market. 

If you shift your energy usage to cheaper, greener times – like the middle of the day when renewables are abundant, you can lower your overall rate through a negative PEA.  

But if you consistently use power during expensive periods, like the early evening – you may see an additional charge as your PEA.  

Base rates locked in 

Want to see how our pricing works? 

Check out our pricing here.

Ready to take control of your energy costs?

Switch to Flow Power today and join a community of Aussies using energy smarter.