Overview
In the lead-up to the 2022 federal election, Labor made one of the most specific economic promises of the campaign: household electricity bills would fall by $275 by 2025. It was a number that appeared in Labor's own modelling, repeated by Anthony Albanese on the campaign trail, and cited in official policy documents. It did not happen.
According to the Australian Energy Regulator's State of the Energy Market 2025 report, the average Australian household electricity bill has risen from approximately $1,421 in 2021–22 to an estimated $1,940 in 2025–26 — an increase of more than $500, or 36.5%. The $300 energy rebate introduced in the 2024–25 budget provides temporary relief but does not change the underlying trajectory.
This article examines what went wrong, what the government has done in response, and what structural changes are needed to actually bring energy costs down for Australian households and businesses.
The $275 promise: what was actually claimed
The $275 figure originated from modelling commissioned by Rewiring Australia, an electrification advocacy group, and adopted by Labor as a central campaign commitment. The projection assumed that by 2025, a combination of accelerated rooftop solar uptake, household battery storage subsidies, and investment in grid-scale renewables would reduce wholesale electricity costs and flow through to retail bills.
The modelling was not without critics. The Australian Energy Market Commission noted at the time that the projection relied on optimistic assumptions about the speed of household electrification and the rate at which wholesale cost reductions would pass through to retail tariffs. Network charges — which make up roughly 40% of a typical electricity bill — were not expected to fall under any scenario.
When pressed on the promise in 2023 as bills rose, Energy Minister Chris Bowen acknowledged the target would not be met in the original timeframe, attributing the shortfall to the global energy price shock following Russia's invasion of Ukraine and the pace of the coal-to-renewables transition. Both are real factors — but neither was unforeseeable, and neither was adequately factored into the original modelling.
The reality: what bills have actually done
The data tells a consistent story. Electricity prices have risen every year since Labor took office, driven by a combination of wholesale market pressures, network investment costs, and the managed exit of coal-fired generation without sufficient dispatchable replacement capacity.
| Year | Avg. annual bill | Change vs 2021–22 | Context |
|---|---|---|---|
| 2021–22 | $1,421 | Baseline | Pre-election benchmark; Labor's own reference point |
| 2022–23 | $1,694 | +19.2% | Wholesale market shock; gas export competition drives prices |
| 2023–24 | $1,812 | +27.5% | Network charges rise; rebates partially offset retail bills |
| 2024–25 | $1,876 | +32.0% | Energy rebate ($300) applied; underlying bill still up 32% |
| 2025–26 | $1,940* | +36.5%* | Forecast; rebate extended but wholesale prices remain elevated |
* Forecast. Sources: AER State of the Energy Market 2025; AEMO Quarterly Energy Dynamics; ABS CPI series.
The $300 energy rebate applied in 2024–25 reduced the out-of-pocket cost for households but did not change the underlying bill. When the rebate expires or is reduced, households will face the full structural increase. The Australian Energy Regulator has projected that without further policy intervention, retail electricity prices will remain elevated through at least 2027–28 as network investment costs are recovered through tariffs.
Gas prices have followed a similar trajectory. The average residential gas bill has risen approximately 28% since 2022, driven by the link between domestic gas prices and export parity pricing — a structural issue that Labor has acknowledged but not resolved through its gas market intervention measures.
Rebates and relief: what the government has done
The government's primary response to rising energy costs has been direct rebates. The 2024–25 budget allocated $3.5 billion for a $300 energy rebate for all households and $325 for eligible small businesses. The 2025–26 budget extended the rebate at a reduced rate of $150 per household.
The rebates have been criticised on two grounds. First, they are temporary — they reduce bills in the year they are applied but do not address the structural causes of high prices. Second, they are universal — every household receives the same rebate regardless of income, meaning the benefit is proportionally smaller for low-income households who spend a higher share of their income on energy.
The government has also introduced the Household Energy Upgrades Fund, a $1.3 billion program providing low-interest loans for energy efficiency upgrades including solar, batteries, and heat pumps. Uptake has been slower than projected, with the Clean Energy Finance Corporation reporting approximately 18,000 loans approved in the first 18 months against a target of 110,000 by 2026.
Renewables policy: the transition and its costs
Labor's 82% renewables target by 2030 is the centrepiece of its energy policy. The target is ambitious — Australia currently generates approximately 38% of its electricity from renewables — and achieving it requires an unprecedented pace of grid investment, transmission infrastructure, and firming capacity.
The Australian Energy Market Operator's 2025 Integrated System Plan estimates that achieving the 82% target will require $122 billion in new generation and transmission investment by 2030. This investment will be recovered through network charges on electricity bills — the same charges that already account for 40% of a typical household bill.
This creates a structural tension at the heart of Labor's energy policy: the transition to renewables that is supposed to reduce bills in the long run requires upfront investment that raises bills in the short and medium term. The government has not been transparent about this trade-off in its public communications.
The early retirement of coal-fired generation has also created reliability challenges. The closure of Liddell Power Station in 2023 and the accelerated retirement of Eraring — Australia's largest coal plant — have tightened reserve margins in New South Wales, contributing to higher wholesale prices during peak demand periods.
Small business: the hidden energy burden
While household energy costs have attracted the most political attention, small businesses have faced even steeper increases. Commercial electricity tariffs have risen approximately 42% since 2022, driven by higher network charges for commercial connections and the expiry of fixed-rate contracts negotiated before the price spike.
The $325 small business energy rebate introduced in 2024–25 was available only to businesses with annual electricity consumption below 100 MWh — a threshold that excludes most hospitality, manufacturing, and retail businesses. The Council of Small Business Organisations Australia estimated that fewer than 30% of eligible small businesses successfully claimed the rebate due to administrative complexity.
Energy costs now represent the third-largest operating expense for small businesses in the hospitality and retail sectors, behind labour and rent. The Australian Small Business and Family Enterprise Ombudsman's 2025 annual report identified energy affordability as the top policy concern for small business operators for the second consecutive year.
The data: what the official sources show
The following data points are drawn from official sources and are not in dispute. They represent the factual foundation for any honest assessment of Labor's energy policy record.
- ABS CPI (Electricity), June 2026: Electricity prices up 33.8% since the March 2022 quarter (pre-election). Gas and other household fuels up 26.4%.
- AER State of the Energy Market 2025: Average residential electricity bill $1,876 in 2024–25 (before rebate). Network charges up 18% since 2022 due to transmission investment cost recovery.
- AEMO Quarterly Energy Dynamics Q1 2026: Wholesale electricity prices averaged $112/MWh in Q1 2026, down from the 2022 peak of $198/MWh but still 58% above the 2019–21 average of $71/MWh.
- Productivity Commission (2025): Australia's electricity prices are now the fourth-highest among OECD nations for residential consumers, up from ninth in 2019.
- COSBOA Energy Survey (2025): 68% of small business operators report energy costs are "significantly higher" than two years ago; 41% have reduced operating hours or staffing in response.
What needs to change
The energy price crisis is not simply a consequence of global market forces. It reflects specific policy choices — and different choices could produce different outcomes. The following reforms are supported by evidence and have been recommended by independent bodies including the Productivity Commission, the AEMC, and the Australian Competition and Consumer Commission.
- Gas market reform: Extend the Australian Domestic Gas Security Mechanism to cap export volumes and reduce the link between domestic and export parity pricing. The ACCC has recommended this since 2022; the government has resisted.
- Network charge transparency: Require distributors to publish five-year network charge forecasts so households and businesses can plan. Currently, network charge increases are announced with minimal notice.
- Targeted rebates: Replace universal energy rebates with means-tested support that provides proportionally greater relief to low-income households. The current universal approach costs more and helps less.
- Firming capacity investment: Accelerate investment in pumped hydro, grid-scale batteries, and demand response to reduce the wholesale price spikes that drive retail bill increases. Snowy 2.0 delays have created a firming gap that is costing consumers.
- Planning reform: Streamline state and federal planning approvals for transmission infrastructure. The current approval timeline of 7–12 years for major transmission projects is incompatible with the 2030 renewables target.
None of these reforms require abandoning the transition to renewables. They require honest acknowledgment that the transition has costs, transparent communication about the timeline for bill relief, and targeted support for those who cannot absorb the interim price increases.