Wholesale energy prices surge – more power pain for households?
Power prices across Australia's eastern seaboard are trending upwards but it's too soon to tell if households will be worse off just yet.
The Australian Energy Regulator has released its quarterly wholesale markets report for June 2024, with the outlook looking fairly grim.
Before we get into the gist, it's always good to remember that wholesale electricity prices may not impact you straight away.
However, they play a big role in how energy prices (or default price caps) for residential consumers and small businesses are set each year on 1 July.
Now for some context from the report:
- Price increases: The cost of electricity jumped by over 20% in the last quarter.
- Most impacted states: Average wholesale energy price in VIC nearly doubled, rising by 99% compared to the previous three months. NSW energy prices skyrocketed by 86%, reaching the highest level among all states. Tasmania also experienced a significant increase of 110% due to a drought. QLD's managed to buck the trend and had lower prices compared to the previous quarter.
- Factors driving higher prices: A frosty winter lifted demand, there were several network outages, and lower renewable energy output including solar and wind generation impacted the overall supply of electricity.
- Gas generation jumps: To compensate, gas-powered generation rose by 70% compared to the previous three months and led to higher prices.
- Market response: The Australian Energy Market Operator (AEMO) has issued a gas shortfall threat due to the high demand. It says we'll need to rely on gas flows from QLD and storage withdrawals from the Iona facility in VIC.
- Forward price expectations: Forward wholesale pricing for electricity for 2025 has increased across all regions.
AER board member Jarrod Ball said in a media release:
While we would expect to see wholesale prices rise as weather in southern states cools and demand rises to keep people warm, the combined impact of cold snaps, planned and unforeseen network outages, combined with rebidding and lower solar and wind output has pushed electricity prices higher than this time last year.
AEMO chief executive, Daniel Westerman, explained in a statement why it was interesting how certain states were impacted this time around.
"Queensland and New South Wales wholesale prices have generally been above those in the southern regions, driven by a higher contribution of renewable energy in Victoria and South Australia," Westerman said.
"In the last quarter, Victoria and South Australia experienced higher energy prices than Queensland, because lower output from wind and hydro generation was replaced by higher cost sources."
What can you do to save on your household energy bills right now?
There's no sugarcoating that power price hikes since 2022 have made our energy bills jump to extremes.
What's currently in your hands is to shop around for a cheaper energy deal. Even your existing provider may have a cheaper plan to offer you so if you make a quick call, there's a chance to lock in instant savings.
And then reaaaallly stay on top of your bills to understand how much energy you're using, how much you pay each month or quarter and make changes accordingly.
Lastly, speak to your provider or visit your state government's website to see if you're eligible for any energy rebate or concession which can help lower your bills.
Compare energy plans on Finder in under 10 minutes to see if you can find a cheaper electricity or gas plan than what you're currently on.
