Wholesale energy prices fall, but will Aussies see a difference in their electricity bills?
Wednesday 19 February 2020
Good news, Australia!
The latest figures from the Australian Energy Regulator (AER) have revealed that wholesale energy prices have fallen across all states and territories (excluding Western Australia and the Northern Territory).
The AER recorded a year-on-year decrease in wholesale prices of between 10% - 20% during Quarter 4 (October, November and December), which ranged between $65 per MWh in Queensland to $87 per MWh in South Australia.
Not to be confused with the cost Aussies are charged to have electricity supplied in their home, wholesale energy costs refer to the price energy retailers are charged to purchase electricity in the market.
AER Chair, Clare Savage welcomed the positive news, stating that prices hadn’t been this low since 2017.
“These figures show that for the first time in two years, since Q4 2017, average prices in all NEM states were below $90 per MWh. This is good to see after a period of sustained high prices,” she said.
The news comes one week following the regulator's announcement of a slight increase in the default market offer (DMO) price in New South Wales, and a decrease in South Australia and South-East Queensland.
Savage went on to explain that despite events where wholesale prices skyrocketed in South Australia and Victoria due to high demand during extreme weather conditions, the National Energy Market (NEM) still managed to keep its cool.
“There were some high price events late in the quarter during periods of extreme heat across the south-east of the country,” she said.
“The report demonstrates that the NEM coped well under the pressure of combined extreme weather and generation plant problems later in the year.”
But will this decrease actually make a difference to Aussie electricity bills?
Mozo’s energy expert, Nathan Warne says yes, but not as much as you might expect.
“One thing to keep in mind is that wholesale prices only make up a third of your electricity bill, plus these price drops only accounted for a quarter of the year, so if your bill was set to change, it would only be a minor decrease. However, if wholesale prices continued to fall, then we may start to see a gradual decline in our electricity bills,” he said.
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