About 800,000 households in Victoria, NSW, Queensland and South Australia are on default offers, as are more than 160,000 small businesses, while more than 90 per cent of customers across the country are on market contracts rather than the default offers.

The NSW and Queensland default offer price rises are being driven largely by spiking wholesale costs because of higher coal and gas prices adding to the cost of fuelling the states’ biggest power stations. Coal and natural gas prices have been rising sharply around the world as a global energy crunch is being exacerbated by energy utilities shunning Russian supplies and scrambling for alternatives in a bid to starve Moscow of the revenue it needs to fund the war in Ukraine.

Prices for cargoes of thermal coal at the Port of Newcastle have more than tripled from $100 a tonne to $350 a tonne in the past 12 months as global demand ramps up.

Lynne Gallagher, of Energy Consumers Australia, called on energy retailers to shield customers from the full extent of the spike in the default market offer.

“Most consumers are supplied by the largest three retailers, and we believe there is some room in their margins whereby they can, and should, absorb some of the pain of rising wholesale costs,” Gallagher said.

”Winter is almost upon us and, with it, the need for many Australian households and small businesses to increase their energy use at certain times to keep themselves warm, comfortable and healthy.“

The Australian Energy Regulator said default market offers were governed by laws designed not to set the cheapest price possible, but rather establish a rate of pay for customers that was as low as possible while enabling retailers to remain economically viable.

“In setting these new default market offer prices, we understand the significant impact they will have on some consumers who may already be struggling with cost-of-living pressures,” Australian Energy Regulator chair Clare Savage said.

“We have given scrutiny to all factors affecting the default market offer calculation and have set safety-net prices that reflect the current conditions and underlying costs to retailers.”

Sarah McNamara of the Australian Energy Council, whose members include AGL, Origin Energy and EnergyAustralia, said on Thursday said the default market offer increase was “news that most of us could have done without”.

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“No one likes to see prices rise, and with the current cost-of-living pressures, it’s important that consumers shop around for the best deal.”

The default market offer and the Victorian default offer constituted “regulated price caps”, McNamara added, while market deals from energy retailers were more competitive and could save customers money.

“Default offers are not the cheapest deal out there, they exist for customers who aren’t shopping around for a better energy deal,” she said.

“Again, we would say to everyone, look at your energy bill and ask, ‘How can I get a better deal?’”