Powershop has announced a significant drop in electricity prices for customers in South East Queensland, while also bucking the trend by cutting rates in New South Wales.
The retailer, which promotes regular power savings via its online shop, will cut its rates in Queensland by 8.6% – saving the average household around $140 a year.
In NSW, where most retailers have either frozen their rates or passed on only small price reductions, Powershop is cutting costs by 3% – saving the average household about $74 a year.
The Melbourne-based retailer, which launched in Queensland in 2017 and NSW in 2015, says the price cuts have been made possible because of parent company Meridian Energy’s recent investment in hydro and wind energy generation assets.
Powershop also recently announced a price drop in Victoria where it is set to start retailing natural gas and dual fuel deals.
But while Powershop refers to a decrease in wholesale power costs, price cuts from most other retailers have been fairly modest. In Queensland, Origin Energy and AGL have cut residential tariffs by less than 2%, while EnergyAustralia’s rates are being trimmed by 3.8%.
Powershop Chief Executive, Ed McManus, told the Financial Review that the price cuts were possible because wholesale electricity prices have fallen from the very high levels of last winter and also because Meridian has added hydro power stations and wind and solar projects to its portfolio. The Hume Power Station is said to be particularly useful because it can deliver power to NSW or Victoria depending on which market has higher prices.
“It’s a combination of wholesale prices coming down and the fact that we have energy (that costs) below the wholesale price because of our investments, and the fact that we can manage the risk more effectively now with the diversity of energy resources and the benefit of Hume,” he said.
Energy Minister Josh Frydenberg welcomed Powershop’s move, saying it showed the government’s campaign to reduce energy prices is working.
He said: “We continue to take action on every front to put downward pressure on prices and our efforts be they with the networks, wholesale or retail market are making a difference.
“With prices recently coming down in a number of states, we have turned the corner with the government’s energy plan working.”
Why now is the time to shop around for cheaper energy
After two years of sharp price increases, there is now some relief for struggling energy customers. But while the savings passed on by most retailers are fairly modest this July, there will be opportunities for households to save even more if they shop around, said Canstar Blue Editor Simon Downes.
“Most retailers should be cutting rates in New South Wales, South Australia and Queensland, so take the time to compare plans and make the best of the situation. If your provider isn’t cutting prices, it could be time to find a new one,” he said.
“While we’re not seeing the drastic price increases of last July, we’re all still paying a very high price for electricity and should be trying to secure savings wherever possible.
“Price reductions are always good news, but remember that not all retailers are changing the same base rates, so there could still be a big difference in their overall prices. That’s why it’s helpful to use energy comparison websites like ours to see how they really stack up.”