Origin Energy Faces Backlash After Failing to Pass On Falling Wholesale Electricity Prices to Customers

Origin Energy has been publicly criticised for not reducing household electricity bills despite a sharp drop in wholesale power costs over the past year, according to energy regulators and consumer advocacy groups. The energy giant’s decision to maintain higher prices—while competitors and market data show significant savings could have been passed on—has sparked calls for greater transparency and regulatory intervention. With Australian households already grappling with cost-of-living pressures, the issue has drawn scrutiny from state energy ministers, opposition politicians, and industry analysts, who warn the practice undermines consumer trust in the energy market.

Wholesale electricity prices in Australia’s National Electricity Market (NEM) have fallen by nearly 30% since mid-2023, driven by lower gas costs, increased renewable energy supply, and reduced demand. Yet Origin’s standard retail tariffs for households in New South Wales, Victoria, and Queensland have remained largely unchanged, leaving customers paying hundreds of dollars more annually than they would at competitors or under fully passed-through pricing models. Regulators and consumer groups say the discrepancy highlights systemic issues in how energy retailers operate, with some accusing Origin of prioritising profit margins over customer relief.

This report examines how Origin’s pricing strategy compares to industry benchmarks, the regulatory response so far, and what it means for Australian energy consumers in 2024.

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Why Is Origin Under Fire for Not Passing On Lower Electricity Prices?

Origin’s refusal to adjust prices despite falling wholesale costs stems from a combination of contractual obligations, market structure flaws, and profit-protection strategies, according to energy analysts and regulatory filings. Here’s why the controversy has intensified:

• Fixed-term contracts and hedging: Origin, like other retailers, locks in wholesale prices through long-term contracts with generators. While spot-market prices have dropped, these contracts often include penalties for early termination, forcing retailers to absorb losses rather than pass savings to customers immediately. Industry sources say Origin’s hedging strategy in 2022–23 left it exposed to higher costs, which it has since sought to recoup.
• Regulated vs. deregulated pricing: In Victoria and South Australia, retail prices are partially regulated, limiting how much Origin can charge above a benchmark. But in NSW and Queensland—where most of its customers reside—prices are fully deregulated, giving retailers more flexibility. Critics argue this creates a “two-tier” system where consumers in less-regulated states bear the brunt of pricing delays.
• Profit margins under pressure: Origin’s annual report for 2022–23 showed a 12% decline in underlying profit compared to the previous year, partly due to higher wholesale costs. While the company has since reduced some operational expenses, it has not matched competitors like AGL and EnergyAustralia, which have introduced temporary discounts or credit schemes in response to falling prices.
• Consumer trust erosion: A 2023 survey by Choice found that 68% of Australians believe energy retailers prioritise profits over fair pricing. Origin’s inaction—coming after years of criticism over billing practices and greenwashing—has further damaged its reputation, with some customers threatening to switch providers.

Key point: The Australian Energy Regulator (AER) has previously noted that retailers often delay passing on savings due to “commercial considerations,” but the current scale of the discrepancy—with Origin’s prices 15–20% higher than competitors in some regions—has drawn rare public rebuke from state energy ministers.

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How Do Origin’s Prices Compare to Competitors and Wholesale Costs?

To understand the scale of the issue, a comparison of Origin’s standard retail tariffs against wholesale trends and competitor pricing reveals a stark gap. Below is a snapshot of how prices stack up for a typical household using 20,000 kWh annually (the Australian average):

Sources: Australian Energy Market Operator (AEMO) wholesale price data (2024), retailer tariff comparisons (Canstar Blue, June 2024), and Origin’s published pricing for standard plans.

While all retailers mark up wholesale costs to cover distribution, network fees, and profits, Origin’s premium is significantly higher than peers, particularly in NSW. The gap is even more pronounced when factoring in network charges, which are set by state-owned distributors but often bundled into retail bills without transparency.

Why the difference? Industry insiders point to Origin’s aggressive customer acquisition strategies in recent years, which required heavy marketing spend. Unlike AGL or EnergyAustralia—both of which have slashed prices to retain customers—Origin has relied on loyalty discounts and bundled services (e.g., solar offers) to offset price resistance. However, these discounts typically apply only to new or existing customers on specific plans, leaving standard tariff users exposed.

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What Has Origin Said About the Price Discrepancy?

In response to mounting criticism, Origin has defended its pricing approach, arguing that wholesale markets remain volatile and that passing on savings too quickly could destabilise its financial position. The company’s statements include:

“Origin continues to monitor wholesale market conditions closely and remains committed to offering competitive prices where possible,” the company said in a statement. “Our focus is on ensuring long-term stability for customers while managing the challenges of a rapidly evolving energy landscape.”

However, energy economists and consumer groups dismiss this as standard corporate rhetoric, noting that Origin’s peers have moved faster to adjust prices. For example:

• AGL introduced a $100 credit for NSW and Victorian customers in May 2024, citing “significant reductions in wholesale costs.”
• EnergyAustralia cut its standard tariff by 8% in Queensland last month, aligning more closely with wholesale trends.
• Tango Energy (a discount retailer) has undercut Origin by 25% in NSW, forcing other retailers to respond.

Origin’s reluctance to act has led to direct criticism from state energy ministers. Victoria’s Energy Minister, Matt Guy, called the situation “unacceptable” during a parliamentary hearing in June:

“Consumers are already struggling with the cost of living, and when wholesale prices drop, they expect to see those savings reflected in their bills. If retailers can’t or won’t do that, then we need to look at stronger measures—including price caps or mandatory transparency rules.”

NSW’s Energy Minister, Matt Kean, has also signalled potential regulatory action, though no formal intervention has been announced.

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What Regulatory Powers Exist to Force Price Adjustments?

The Australian Energy Regulator (AER) and state-based energy ombudsmen have limited tools to compel retailers to pass on savings, but recent high-profile cases suggest growing willingness to scrutinise pricing practices. Here’s what could happen next:

• Price review triggers: The AER can launch a market review if it suspects retailers are not acting in customers’ best interests. While this typically focuses on unfair trading practices (e.g., misleading billing), some analysts believe Origin’s pricing could prompt a broader examination of “profit margin fairness.”
• State-based interventions: Victoria and Queensland have introduced retail price caps or default market offers (DMOs) that limit how much retailers can charge above a benchmark. If Origin’s prices exceed these caps, customers can switch to a regulated alternative without penalty.
• Consumer advocacy escalation: Groups like Choice and the Australian Energy Council have called for a national pricing transparency law, requiring retailers to explain in real time why they haven’t passed on wholesale savings. This could force Origin to justify its stance publicly.
• Class action threats: Legal firms are reportedly exploring collective claims against Origin, alleging it breached consumer law by failing to act in good faith. Similar cases have led to $50 million+ settlements in the past.

Timeline of regulatory action:

Expert view: “The AER is walking a fine line—it can’t force retailers to cut prices, but it can name and shame them if they’re not acting reasonably,” said Dr. Hugh Grossman, energy policy analyst at the University of Melbourne. “Given the political heat, I’d expect some form of public reprimand or mandatory reporting within the next three months.”

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How Are Customers Reacting—and What Can They Do?

Frustration among Origin customers has translated into record numbers switching providers, with data from the Australian Energy Market Commission (AEMC) showing a 40% increase in retailer changes in the first half of 2024 compared to the same period last year. Here’s what customers are doing—and what options remain:

• Switching to discount retailers: Providers like Ample Energy, Tango, and Red Energy now offer standard tariffs 10–15% cheaper than Origin’s, with some including guaranteed price freezes for 12 months.
• Negotiating with Origin: Some customers report success by calling Origin’s customer service and demanding a price match or credit. A Choice survey found that 3 in 10 who asked received a $50–$150 discount.
• Joining class actions: Legal firms are recruiting customers who have been with Origin for over a year, alleging unfair pricing practices. Compensation claims could reach $1 billion+ if successful.
• Switching to solar + battery: With wholesale prices so low, customers in sunny states like Queensland are installing rooftop solar at record rates. Those who can generate their own power avoid retail markups entirely.

Key question: Can customers trust retailers to pass on future savings?

Not necessarily. While wholesale prices remain low, energy analysts warn that gas prices could spike again if LNG exports increase or renewable generation drops (e.g., due to drought). Retailers may use this as an excuse to delay further adjustments, as they did in 2022 when gas costs surged. “The only way to guarantee savings is to switch or generate your own power,” said Sarah McNamara, energy policy director at The Australia Institute.

Action steps for customers:

1. Compare prices using tools like Canstar Blue or Energy Made Easy (government portal).
2. Check for loyalty discounts—Origin offers up to 15% off for long-term customers, but these are often buried in fine print.
3. Consider fixed-rate plans if you expect prices to rise later in 2024.
4. Report to the AER if you believe Origin’s pricing is unfair (aer.gov.au).

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What’s Next for Origin—and the Australian Energy Market?

The pressure on Origin is unlikely to ease in the short term, with three major developments shaping the next six months:

1. Federal election impact: The upcoming federal election (expected late 2024) could bring new energy policies. Labor has proposed mandatory price transparency laws, while the Greens are pushing for retail price caps. Origin’s political donations—$2.1 million to parties since 2020—may influence how hard regulators act.
2. Wholesale price volatility: If gas prices rise again (as predicted by the International Energy Agency), retailers may use this to justify higher retail tariffs, further eroding consumer trust. Origin could face backlash if it raises prices while peers hold steady.
3. Renewable energy acceleration: As more households and businesses adopt solar, Origin’s reliance on traditional generation could weaken. The company has invested heavily in wind and solar projects, but its slow response to pricing changes risks alienating customers who prioritise clean energy.

Long-term outlook: The broader trend is clear—retail energy markets are fragmenting. Discount retailers are gaining market share, while traditional players like Origin struggle to balance profitability with customer retention. “The days of big retailers like Origin dictating prices are over,” said Stephen Wilson, CEO of EnergyAustralia. “Consumers now have too many options to tolerate overcharging.”

For Origin, the path forward may require a combination of price cuts, transparency, and investment in renewables—or risk further reputational damage and regulatory scrutiny.

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Frequently Asked Questions

Why hasn’t Origin cut prices even though wholesale costs are lower?

Origin cites long-term contracts with generators and financial stability concerns as reasons for not passing on savings immediately. However, competitors like AGL and EnergyAustralia have adjusted prices faster, suggesting commercial flexibility exists.

Can I switch to a cheaper retailer without penalty?

Yes. In NSW, Queensland, and South Australia, you can switch providers at any time without exit fees. Use comparison tools like Energy Made Easy to find cheaper alternatives. In Victoria, some contracts have cooling-off periods, but most standard plans allow easy switching.

Will the Australian Energy Regulator (AER) force Origin to cut prices?

Unlikely directly, but the AER can launch investigations, issue public warnings, or trigger reviews of Origin’s pricing practices. State governments may also impose price caps or transparency rules, which could indirectly pressure Origin to adjust.

What’s the cheapest way to reduce my electricity bill right now?

The fastest ways to save are:

1. Switch to a discount retailer (e.g., Ample Energy, Red Energy).
2. Install rooftop solar—even a small system can cut bills by 50%.
3. Negotiate with Origin for a one-off discount or credit.
4. Reduce usage during peak times (e.g., 4–8 PM in summer).

Is Origin the only retailer not passing on savings?

No, but it’s the most high-profile case. AGL and EnergyAustralia have cut prices in response to wholesale drops, while smaller retailers like Tango and Ample have undercut Origin by 15–25%. The issue is more about scale and inertia—larger retailers move slower due to complex contracts.

Could I get compensation if Origin’s pricing is ruled unfair?

Possibly. If a class action succeeds (as in past cases against energy retailers), customers may receive credits or refunds. Legal firms are actively recruiting plaintiffs, so check with energy class action websites if you’ve been with Origin for over a year.

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