Why this summer could add to energy price pressures
After surviving the July 1 energy price changes, Aussies could see base energy prices increase this summer. This is due to both the reduction of water in the Snowy hydro dam and regular coal and gas plant breakdowns, which could see wholesale prices soar, with effects trickling down to everyday Aussies.
The Sydney Morning Herald reported that national power prices jumped more than 5% in the last week, and Victorians are feeling the strongest effects, with energy prices the week prior (September 25-October 3) rising by 9%, from $86.50/MWh to $94/MWh.
“The government are doing all this advertising about prices going down, but prices are going up,” said Energy Action Chief Executive, Ivan Slavich.
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“There’s still backwardation, where future prices get lower eventually, but the entire base price has been shifted up, and this base level may go up even more.”
Slavich believes this may be due to the water levels in the Snowy hydro dam, which has “spooked the market, pushing prices up.”
NSW among the most at risk of price hikes
While Victoria may have felt the heat in the last few weeks, regular coal and gas plant breakdowns in NSW could potentially drive up energy prices, too.
In NSW alone, Aussies have seen 19 power plant breakdowns so far this year, with a shocking five plants simultaneously offline between June 5 and 9 alone, according to the Herald Sun.
Even when there are breakdowns, energy generation still needs to happen, placing the burden on other sources to produce enough energy to power the grid effectively.
“This series of failures of the NSW gas and coal fleet compromised the ability of the system to meet electricity demand over this period,” said a report from The Australia Institute.
Wholesale energy prices in that time frame reached $2,400/MWh, in comparison to the normal $60-$300/MWh.
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It’s likely these surges in wholesale energy pricing will affect consumers.
Mozo Data Manager Peter Marshall agrees that these spikes could cause a trickle down effect on everyday Australians.
“If the past is any indication, there’s a good chance that with an increase in power plant breakdowns over the summer causing wholesale energy prices to surge, Australian consumers could be faced with some increasing energy bills.”
And with these breakdowns taking place, The Australia Institute Climate and Energy Division Director Richie Merzian has said that NSW should be bracing for more power outages and blackouts.
“We know that NSW is highly dependent on old coal power stations. We know that these become more unreliable every year as they get older and are very prone to breakdowns in the heat,” Merzian said.
“Our reliance on these old coal power stations is increasing the risk of blackouts.”
As energy prices rise across the country, now could be the perfect time to review your existing energy plan. To find an energy deal that’s easier on your budget, check out the winners of the 2018 Mozo Experts Choice Energy Awards, or head to our energy comparison tool.
