Wholesale prices have dropped, but will my power bill?

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Wholesale energy prices are getting cheaper across Australia, according to the Australian Energy Regulator (AER). But are your power bills?

The industry regulator has reported that prices continued to fall across the National Electricity Market (NEM), which includes all Australian states and territories aside from Western Australia and the Northern Territory, in the fourth quarter of 2019.

The AER is responsible for monitoring the electricity and gas markets within the NEM, producing reports on price movements and generation. The latest figures suggest that average wholesale prices across the NEM were between 10 and 20 per cent lower than they were a year prior.

It was found that prices ranged from $65/mWh in Queensland to $87/mWh in South Australia. Put in context, Q4 prices in 2018 sat between $85/mWh and $100/mWh across the states.

AER Chair, Clare Savage, said the declining wholesale prices come after a sustained period of high costs.

“These figures show that for the first time in two years, since Q4 2017, average prices in all NEM states were below $90 per MWh,” she said.

There were also a number of incidents of price spikes resulting in prices over $5,000/mWh in South Australia and Victoria in late December, coinciding with the extreme weather incidents experienced at the time.

This heat, as well as shortfalls in a few generation plants in Victoria, gave rise to concerns that there wouldn’t be enough generation to ensure reliable electricity supply.

“There were some high price events late in the quarter during periods of extreme heat across the south-east of the country,” Ms Savage said.

“The report demonstrates that the NEM coped well under the pressure of combined extreme weather and generation plant problems later in the year.”

If wholesale prices are going down, why isn’t my power bill?

While the wholesale energy market sees some relief, it’s negated by a recent electricity price hike in Victoria and proposed rate increases in New South Wales.

January 2020 saw annual power bills for customers on a flat rate tariff standing offer in Victoria increase from around $1,400 to $1,500 on average across all distribution zones, according to Victoria’s own energy industry regulator, the Essential Services Commission.

The news also comes alongside the AER announcing proposed changes to default pricing in NSW, SE QLD and SA. The regulator has proposed that the Default Market Offer will decrease in SA and QLD, but increase slightly across all distribution zones in NSW.

“Consumers seem to be getting mixed messages about the state of the energy market and what this means for their bills,” said Canstar Blue Editor-in-Chief, Simon Downes.

“The news that wholesale energy costs are coming down is to be welcomed, but for consumers, this is only good news if it actually translates into cheaper rates.

“I’d like to think that the energy market is competitive enough that some retailers will be able to take advantage of lower wholesale costs to pass on the savings to customers. But it’s important to remember that retail costs only account for a small part of what makes up a typical residential energy bill, with distribution charges the biggest factor.

“All a consumer can hope for is that wholesale pricing will be passed down to the energy retail level, in order to give welcome relief to what seems like perpetually increasing bills.”

Energy Prices Compared

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.


Image credits: stocktr/shutterstock.com

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