South Australia’s Latest Electric Shock – 18% Power Price Hike

The average South Australian household will need to find an additional $275 a year for electricity bills from August and an extra $100 for gas from July.

The Essential Services Commission of South Australia (ESCOSA) has  formally announced annual gas and electricity price adjustments today – an 18 per cent electricity increase and a 17.7 per cent increase in the price of gas.

While the jumps will be a shock for many households, they are reportedly less than what electricity and gas companies were wanting. The extra $275 annually is based on yearly consumption of 5 megawatt hours of electricity, or a daily usage of 13.7 kilowatt-hours. Households consuming more can expect even higher bills, as will the average small business.

The hikes follow a 17% leap in the cost of electricity in South Australia just twelve months ago.

Families in South Australia are increasingly feeling the strain caused by double-digit energy price rises and turning to energy efficiency strategies and/or installing solar power systems to slash or even blow away their electricity bills.

According to solar provider Energy Matters, even a small good quality 1.52kW solar panel array installed in Adelaide can pay for itself in just a few years – and then go on to generate what is essentially free electricity. A larger 4.9kW system can generate estimated savings of $1,824 annually – wiping out an average residential SA electricity bill altogether; even with the latest increases taken into account.

The company provides an online solar quotes tool that calculates and displays the financial benefits for different sized systems.

Aside from providing electricity for direct consumption, solar households in South Australia are also paid for exporting the surplus solar electricity they generate to the mains grid. The current rate of payment for new connections under SA’s solar feed in tariff scheme is 22c per kilowatt hour; which will increase to 25c in July 2012.

South Australia isn’t the only to state that will experience more pain at the power point this year. In New South Wales, electricity prices will increase an average of 11.8% to 20.6% across the state from the beginning of July – and other states are expecting increases as well.

22% of the SA electricity price rise is due to an increase in network charges, 26% due to the upcoming carbon tax and 14% related to other factors.

Approximately 38% of the increase is attributable to feed-in tariff incentives due to the uptake of solar panels in the state. However, it should be noted in the big picture view (2010/2011 – 2013/2014), feed in tariffs will only comprise 6.6% of electricity price increases in South Australia according to figures from the Australian Energy Market Commission (AEMC).

Another point to be considered is without solar PV generating electricity, the shortfall would have been made up elsewhere and likely represented by a further rise in wholesale electricity costs in this round of increases.

Additionally, Solar PV generates the most power during peak periods, when the price of wholesale electricity from other sources such as coal is at its highest; particularly during heatwave conditions when air conditioning creates massive demand.

For example, on January 31 last year, the peak period wholesale electricity price in South Australia averaged $3,734.35 per megawatt hour (Australian Energy Market Operator figures) – more than $3.70 per kilowatt hour.

In these situations, solar PV is especially attractive in terms of its far cheaper short-run marginal costs of production, particularly when it’s generated by residential rooftops where the cost is measured in cents per kilowatt hour, not tens of dollars (the Merit Order Effect).

Related:

Adelaide/South Australia solar power specials