“We’ve seen a lot of retail failures in the UK and we know this will only increase costs for customers.”
Energy retailers will be informing customers of their proposed price increases from July 1 in the coming weeks.
Ms Savage said the pressure on the wholesale market will not go away anytime soon.
“There is definitely some long-term price pressure in the wholesale market,” she said.
“If you don’t have the generation capacity available, we’re seeing quite significantly higher prices.”
Energy consultants warned that this price hike would not be the last runaway wholesale electricity prices in recent weeks that have not been factored into the standard offer decisions of the AER and Victoria’s Essential Services Commission.
“While the delay in releasing the standard market offering has allowed AER to absorb more of the recent price increase than was envisioned in the draft provision, household electricity consumers should expect prices to rise again next year as new standard offerings are instituted, and should now take action to reduce consumption,” said Lisa Zembrodt, director of energy markets and sustainability at Schneider Electric.
“We expect prices to continue to be supported in the near term, at least due to the high volume of coal-fired power plants that are out of service for maintenance, combined with the high prices at which remaining coal-fired power plants are bidding. capacity in the market based on international coal prices.”
She noted that wholesale electricity prices had risen from $48.90 per megawatt-hour in September last year to $77.17/MWh in January and then to just over $100/MWh in March.
But this month it is running at over $300/MWh, while electricity forward prices for later this year have also risen.
Prices for NSW in the September quarter rose $40.90/MWh in a single day on Wednesday, with Queensland and Victoria prices each rising more than $30/MWh, all now higher than June quarterly prices, Dylan McConnell said. from The University of Melbourne’s Climate † Energy College.
“The market doesn’t seem to think there will be any relief anytime soon,” said Dr. McConnell, suggesting standard offering prices may need to be readjusted again later in the year.
The big spike in power prices comes after a federal election campaign has fought over the cost of living and rising inflation.
Business prices soar even higher
Treasurer Jim Chalmers admitted on Wednesday that power prices were on the rise, despite both major parties claiming their respective policies would lower power prices†
According to market standard prices released Thursday, households in NSW will have to pay up to 12.1 percent more for their power and up to 6.8 percent more in Queensland.
Taking into account the Reserve Bank of Australia’s official inflation rate of 5.5 percent for the year ended June 30, the price increase could reach 18.3 percent in NSW and 12.6 percent in Queensland.
Small business customers will have to pay even more, rising to 19 percent in NSW, 12.4 percent in Queensland and 5.7 percent in South Australia.
The AER said wholesale electricity costs for retailers were up 41.4 percent in NSW, 49.5 percent in Queensland and 11.8 percent in South Australia.
Under the pricing scheme, residential customers with standard offerings on the market in NSW will pay between 2.9 percent and 12.1 percent more, or between $40 and $200, on their utility bills next fiscal year. If inflation is taken into account, it will be between 8.4 percent and 17.6 percent higher.
Customers in Southeast Queensland will see price increases of 5.5 to 6.8 percent ($85 to $100 more), while in South Australia, household bills will rise 1.7 to 3.8 percent ($30 and $ 50).
The standard offer on the market, or the fixed offer, is in fact a safety net for electricity customers who have not shopped for a better deal with energy stores.
Only about one in ten customers has a fixed supply, but major energy retailers use prices as a benchmark for determining their energy tariffs for residential and small business customers for the next financial year.
Small business customers in NSW are facing increases of 4.3 percent to 13.5 percent ($310 to $815) over last year. Small businesses in South East Queensland are facing increases of 6.9 percent or $402 more, while the price increase in South Australia is marginal (0.2 percent).
Aside from the Russian war in Ukraine and high global commodity prices, the floods in NSW and Queensland and unplanned outages of older coal plants also pushed up wholesale electricity prices.
Customers encouraged to shop around
Ms Savage said customers should shop around for the best deal from energy retailers.
“It is still a competitive market. We believe there is still significant pressure on retailers to win customers and maintain competitive prices. We think there will be market offers below this standard market offer,” she said.
The projected cost increase would add to other cost of living pressures for consumers, warned Lynn Gallagher, CEO of Energy Consumers Australia.
“It’s no secret that consumers are struggling and that the cost of living has risen. Electricity prices may have fallen in Australia in recent years, but they were still historically high,” she said.
“Now that we see them starting to rise again, there will be a lot of consumers that are ill-positioned to accommodate bill increases.”
Ms Gallagher said she was concerned that these increases could later be followed by others, given continued high prices in the wholesale market.
“As long as wholesale prices remain high, we can’t see bills fall and we certainly think there’s a good chance the bill that consumers will see rise will not be the last,” she said.
EnergyAustralia has confirmed that it will be announcing price changes for many of its customers in the coming months.
“We will inform our customers before price changes come into effect, which usually takes place between June and August. For customers who want certainty that their energy bills do not increase, we offer fixed-rate plans,” said a spokesperson.
AGL Energy said it would consider the AER’s standard market offering and Victorian standard offering decisions before deciding on pricing for customers.
“Any decision to change prices is based on a detailed consideration of a range of factors, including wholesale electricity prices, network changes and market conditions, as well as the value we provide to our customers,” said an AGL spokesperson.
Electricity prices explained
- Standard market offerr: Set every year by the Australian Energy Regulator, this is a safety net for electricity customers who haven’t shopped for a better deal with energy retailers. Only about 10 percent of customers take advantage of this price, but major energy retailers use the offering as a benchmark. The standard price must strike a balance between the need for retailers to pass on rising costs, including the wholesale price for power, and higher bills for consumers.
- Wholesale power price:: The price that retailers pay for supplying power to their customers. Although retailers often have hedge contracts in place to mitigate large price increases. Wholesale prices are normally about a third of a household’s average electricity bill. It can account for nearly half the bills for larger industrial users. Wholesale electricity prices rose 141 percent in the March quarter compared to the previous year, according to the Australian Energy Market Operator. Energy retailers normally pass this on to the consumer in full.
- Retail price for electric power:: This is what your power dealer makes you pay for electricity on your electric bill. The average electricity bill consists of network costs (45 percent), wholesale costs (32 percent), retail costs (10 percent), retail margins (3 percent) and environmental costs (including small-scale renewable energy scheme) (10 percent).
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