The Australian Competition and Consumer Commission (ACCC) warned last June of this year that households will face higher electricity bills in the coming months as the record high wholesale prices from mid-2022 continue to flow through to customers.
The ACCC’s latest Electricity Market Inquiry Report, released June 2023, found that residential electricity bills were higher across most National Electricity Market (NEM) states in the September quarter last year compared to the equivalent quarter in 2021.
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Key findings of the most recent report
The report analysed 13 million residential and small business electricity bills and found that in South Australia households experienced the largest increase, with their median bills rising 9.1% between the September quarters of 2021 and 2022. New South Wales residents saw a 6.4% rise in their bills and in Victoria was 0.6%.
The ACCC said that while wholesale electricity prices have eased since their peak in the middle of 2022, they are still well above historical levels. This is due to a number of factors, including high demand, coal and gas price volatility, and the unplanned outage of several power stations.
The ACCC said that electricity bills will continue to increase this year as the record high wholesale prices from mid-2022 continue to flow through to customers. However, the government has announced rebates of up to $500 for eligible households and $650 for eligible small businesses, which will provide some relief.
The ACCC is closely monitoring retailers’ price changes and has warned that any retailer that breaches the Electricity Retail Code or seeks to mislead consumers about the reasons for electricity prices increasing can expect their attention.
According to ACCC Commissioner Anna Brakey, “Wholesale electricity prices have eased since their peak in the middle of 2022, but we expect electricity bills to increase further this year due to the lag in wholesale costs flowing through to customers.”
“Energy retailers enter into supply contracts with generators years in advance to manage volatility, so households haven’t yet seen the full impact of last year’s wholesale price spikes.”
In addition to the wholesale price spikes, the ACCC said other factors contributing to higher electricity bills include rising demand, increased network costs, and the carbon tax.
The average electricity bill in Australia is around $1253 per year, but this can vary depending on the state and territory, the size of the household, and the type of energy plan.
The ACCC has advised consumers to shop around for a better deal and to consider switching their electricity account to a green energy plan. They have also urged consumers to use energy-efficient appliances and to be mindful of their energy consumption.
Western Australia and the Northern Territory are not connected to the National Electricity Market, while retail electricity prices in the Australian Capital Territory, regional Queensland, and Tasmania remain regulated for many customers.
Source&Image: ACCC Media Releases 30 June 2023
Factors driving wholesale price spikes
Wholesale electricity prices in Australia have been on the rise in recent months, driven by a number of factors. These include:
- Increased demand: Electricity demand has risen as the economy recovers from the COVID-19 pandemic. This has put upward pressure on prices.
- Lower renewable energy output: Renewable energy sources, such as solar PV systems and wind, are intermittent, meaning that they do not always produce electricity when it is needed. This can lead to shortfalls in supply, which can drive up prices.
- Higher fuel prices: The cost of fuel used to generate electricity, such as coal and gas, has been rising. This has also contributed to higher wholesale prices.
Inflation: Inflation is rising in Australia, which is putting upward pressure on prices across the board. This includes wholesale electricity prices.
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The ACCC has warned that wholesale electricity prices will likely continue to rise in the coming months. This is likely to put further pressure on household budgets.
In addition to the factors mentioned above, other factors that can drive wholesale price spikes include:
- Extreme weather events: Natural disasters, such as floods and droughts, can disrupt power generation and transmission, leading to higher prices.
- Maintenance outages: Planned outages for maintenance or repairs can also lead to higher prices, as they reduce the available electricity supply.
- Market manipulation: In some cases, wholesale price spikes may result from market manipulation by unscrupulous traders.
The Australian government is taking a number of steps to address the issue of rising wholesale electricity prices. These include:
- Investing in renewable energy: The government is investing in renewable energy projects, which will help reduce reliance on fossil fuels and stabilise the electricity market.
- Introducing price caps: The government is considering introducing price caps on wholesale electricity prices, which would help to protect consumers from excessive price rises.
- Improving market transparency: The government is also working to improve market transparency, which would help to make it easier for consumers to shop around for the best deals.
These measures are designed to help to keep wholesale electricity prices in check and protect consumers from excessive price rises.
Tips for reducing your electricity bill
There are a number of things you can do to reduce your electricity bill, including:
- Switch to a more efficient energy provider.
- Insulate your home to keep the heat in during winter and the cool air in during summer.
- Use energy-efficient appliances and light bulbs.
- Unplug appliances when you’re not using them.
- Set your thermostat to a higher temperature in summer and a lower temperature in winter.
- Wash your clothes in cold water.
- Take shorter showers.
- Dry your clothes on the line instead of in the dryer.
Addressing the issue
The rising cost of electricity is a major concern for households and businesses across Australia. The ACCC’s latest report shows that electricity bills are already higher than last year and are expected to rise further in the coming months.
The government has announced several measures to help offset the rising energy cost, but these measures will only provide temporary relief. In the long term, it is important to address the underlying factors that are driving up electricity prices.
In the meantime, there are a number of things that households and businesses can do to reduce their electricity bill as what have mentioned in this article. By taking these steps, households and businesses can help to reduce their electricity consumption and save money on their energy bills.
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