Electricity prices continue to fall despite skyrocketing residential consumption
Overall electricity consumption fell by 2% in the second quarter of 2020, compared to the same period last year, according to the latest Inquiry into the National Electricity Market report by the Australian Competition and Consumer Commission (ACCC).
And unsurprisingly, residential electricity consumption has climbed significantly thanks to the COVID-19 lockdown.
Melbourne in particular experienced one of the biggest increases in consumption of between 10% and 30%, compared to last year.
ACCC chair Rod Sims believes this increase is set to put a strain on household budgets and cause many households to fall behind with their energy bills.
“The pandemic is exacerbating energy affordability concerns. At a time when many consumers are experiencing reduced incomes, increased electricity consumption could lead to rising household debt and financial strain,” he said.
“Available data suggests more customers are a month behind in bill payments and energy affordability may become an even bigger concern in coming months.”
However, as wholesale electricity prices continue to remain at their lowest in years, Sims says households should soon start to see this reflected in their annual bill.
“The drop in wholesale prices is excellent news for consumers, especially at a time of rising household bills. While wholesale price falls have been partially offset by higher network costs (except in South Australia where network costs fell), retailers are legally required to pass on any sustained savings to consumers,” he said.
More Aussies ditching default offers
Following extensive analysis of over 1.5 million customer energy bills from 11 retailers, there are now more customers on market offers and fewer on expensive default offers.
“While it is still early days, the analysis of this large unique dataset indicates that electricity pricing and advertising reforms introduced in July last year have been effective in protecting customers on standing offers from excessive pricing and bringing down electricity bills,” says Sims.
These reforms included the introduction of the Default Market Offer (DMO), which imposed a price cap on standing offers and the reduction in confusing discounts in retailer advertising to allow customers to easily compare offers.
The data also found that the median effective price for standing offers for residential and small business customers fell by 4.4% and 7.5%, respectively.
Shopping around still essential to saving
With median market offer prices dropping by 3.5% for residential customers and 1.5% for small business customers, Sims says there is still an opportunity to see further savings.
“It continues to pay for households and small businesses on market offers to shop around, especially those with one of the big three electricity providers, because these customers often paid more than customers with other providers,” he said.
Recent Mozo analysis revealed that Aussie households have the potential to save between $200 - $300 a year on their energy bills, depending on the distribution zone.
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