An annual report released by the AEMC shows falling electricity prices over the coming years, with a three year period modelled by the report indicating that consumers would save $97 on electricity bills out to 2022.
Overall residential electricity prices are estimated to continue falling on the back of increasing supplies of generation in the electricity market and lower regulated prices for networks.
AEMC Chairman, John Pierce, said the tenth price trends report shows costs falling across the three key drivers of consumers’ bills.
Generation costs are falling because of additional generation; regulated network prices have been lowered in response to falling distribution costs; and green scheme costs are being driven down by cheaper large-scale generation certificates for increasing levels of renewable generation.
The report also showed that:
- Wholesale costs are estimated to fall by around $62 from FY19 to FY22 for the representative consumer as more supply comes into the market and demand remains flat
- Network costs are estimated to decrease by $11 over this period
- Environmental costs are estimated to fall by $21 over this period
“While the overall national trend is down all across the supply chain, there are regional differences across states and territories that will affect price outcomes depending on where you live and how much electricity you use,” Mr Pierce said.
“Overall, a representative consumer will pay around $97 less than today by June 2022.”
From FY19 to FY22:
- South East Queensland electricity prices estimated to fall overall by 20 per cent or $278 (an annual average drop of seven per cent)
- South Australia electricity prices estimated to fall overall by two per cent or $27 (an annual average drop of 0.5 per cent)
- Victoria electricity prices estimated to fall overall by five per cent or $53 (an annual average drop of 1.6 per cent)
- NSW electricity prices estimated to fall overall by eight per cent or $107 (an annual average drop of 2.8 per cent)
- ACT electricity prices estimated to fall overall by seven per cent or $134 (an annual average drop of 2.4 per cent)
- Tasmania electricity prices estimated to fall overall by five per cent or $93 (an annual average drop of 1.7 per cent)
- Western Australia electricity costs are projected to rise by 6 per cent or $102. However, actual price outcomes may be different due to different regulatory arrangements in Western Australia
“These results for FY19 to FY22 point to the state of the market over this specific period which will see significant injection of around 5,000MW of new supply,” Mr Pierce said.
“More supply puts downward pressure on prices. But it’s important to note that over a decade of analysis we have seen trends change sharply in response to factors such as sudden generator closures and implementation of new policies. As such, all price projections should be seen as just that, projections.”
Understanding what’s driving prices can help give state and territory governments the information they need to help determine if price changes announced each year by retailers are consistent with changes in the power system’s underlying costs.
Price trends will affect individual households differently depending on how much electricity each consumer uses, and how willing they are to switch to a better energy deal where market offers are available.