Electricity retailers must acknowledge their costs are falling and pass on the savings to households, Minister for Energy and Mining Tom Koutsantonis says.
A newly-published report by the Australian Energy Regulator shows that wholesale electricity prices have fallen sharply.
Significantly, the AER notes that "once retailers' wholesale costs adjust to the lower prices going forward, prices faced by consumers should reflect these lower costs".
In the privatised market, retailers decide their prices independently of government. Wholesale prices are a major component of the costs which retailers consider when setting their offers to households.
The AER report for the fourth quarter of 2024 showed that in South Australia average wholesale prices were $53 per megawatt-hour.
This was less than half the $114/MWh average in the previous quarter and down from $80/MWh in the same quarter of 2022.
For the full year, prices fell 44 per cent.
The AER report follows a similar quarterly report published just last week by the Australian Energy Market Operator. The AEMO report recorded that wholesale prices had nearly halved and attributed the decrease to more generation from cheap renewable power.
In 2023, more than 75 per cent of electricity generated in SA was from renewables. Today's AER report noted that SA's base future prices recorded the biggest drop among the states in the National Electricity Market, falling $38/MWh in the quarter.
There was also a decline in net imports of electricity from Victoria as SA generators met more of SA's demand.
As put by Tom Koutsantonis
This report is further evidence that electricity prices are heading in the right direction, going down after the international energy crisis of 2022.
There can be no more excuses from retailers - they simply must pass on these savings to consumers, not simply pocket extra profits.
It's pleasing to see the Australian Energy Regulator expects consumers to benefit, because the AER will need to factor this into their benchmark default market offer for the 2024-25 year.
South Australia's high proportion of renewables – which exceeded 75 per cent of generation in 2023 – is key to our state's wholesale prices being far lower than the black-coal states of NSW and Queensland.
Generation and network costs are by far the biggest components of household electricity bills. Retailers must acknowledge that their costs have fallen – and pass those savings on to households and businesses.
