Energy prices expected to fall despite rising power bills in 2020

Falling wholesale electricity prices and new laws requiring energy retailers to pass on rate cuts to customers are expected to lower power bills this year, despite a recent surge in residential consumption due to the coronavirus pandemic.

A new report from the Australian Competition and Consumer Commission (ACCC) states that average household energy bills rose by seven per cent in 2020 as a result of people spending more time at home, while small businesses used 17 per cent less power due to a reduction in business operations performed onsite.

Although the pandemic has led to an increase in residential energy consumption across Australia, major falls to wholesale prices should help lower bills said ACCC Chair, Rod Sims.

“COVID-19 had a major effect on electricity use last year. Many households that were already experiencing financial difficulty had higher electricity bills to pay, and although lower bills for small businesses would normally be something to celebrate, it wasn’t a welcome outcome in the context of a pandemic recession,” he said.

“We expect 2021 to be a better year for households and small businesses as large reductions in the wholesale cost of electricity continue to flow through to people’s bills.”

Wholesale electricity costs – the price retailers pay for energy from generators – reportedly dropped by 50 per cent in mid-2019 to early 2021, according to the ACCC report.

Though wholesale prices have since increased in May and June, caused by several factors, including the Callide power outage in Brisbane, confidence still remains that prices will remain low in comparison to recent years.

Compare Energy Prices

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Ausgrid network in Sydney but prices may vary depending on your circumstances. This comparison assumes general energy usage of 3900kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Citipower network in Melbourne but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the Energex network in Brisbane but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4600kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

Here are some of the cheapest published deals from the retailers on our database that include a link to the retailer’s website for further details. These are products from referral partners†. These costs are based on the SA Power network in Adelaide but prices may vary depending on your circumstances. This comparison assumes general energy usage of 4000kWh/year for a residential customer on a single rate tariff. Please use our comparison tool for a specific comparison in your area. Our database may not cover all deals in your area. As always, check all details of any plan directly with the retailer before making a purchase decision.

More savings available on market offers

The ACCC reported that further savings were up for grabs to seven per cent of residential customers still on pricy standing offers in 2020, yet many households had taken advantage of switching to competitive market offers in recent years.

New Canstar Blue data confirms that consumers on standing offers are missing out on cheaper prices, with hundreds of dollars of yearly savings at stake. And with upcoming changes set to lower standing offer prices, known as the default market offer (DMO), it should serve as a reminder for customers to shop around, or else they may end up paying more for power than they need to, explained Canstar Blue’s Energy Editor, Jared Mullane.

“It sounds cliché but now’s a great time for customers to review their energy plans, especially if they’re spending more time at home,” he said. “Using more energy is an unfortunate reality with lockdowns and more people working from home, so it’s important for bill-payers to check the rates listed on their bills.”

It’s also worth considering whether a plan with fixed rates is better suited to customers’ needs, given that wholesale prices have dipped recently, added Mr Mullane.

“It could be worthwhile looking at plans that lock in rates, this way customers know their prices won’t change for a set period of time, helping them better manage their household budgets. Though wholesale electricity prices have declined, there are no guarantees that these savings will be passed on to bill-payers, despite new legislation stating that retailers must make reasonable changes to their prices to reflect wholesale market conditions.”

The Prohibiting Energy Market Misconduct (PEMM) law was introduced in June 2020, which makes retailers accountable for passing on reasonable price changes in line with the cost of purchasing electricity.


Image credit: fizkes/Shutterstock.com

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