Australian energy prices remain on a downward trajectory, with wholesale electricity and gas prices falling to six and five-year lows respectively during the third quarter of 2020.
The Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics Q3 2020 report shows prices in the National Electricity Market (NEM) have dropped to levels not seen since 2014, declining by up to 48 per cent compared to the same time last year. Key drivers for this decline were improved output from coal generators and an increase in wind and solar generation.
New low-price records were also set in individual regions:
- in South Australia, quarterly electricity prices declined to $40 per MWh, the lowest Q3 price since 2011, while prices in the month of September averaged $15/MWh was SA’s record monthly low;
- Queensland recorded a quarterly average price of $32/MWh, its lowest Q3 price since 2014; and
- New South Wales quarterly average of $46/MWh was the lowest Q3 since 2014.
With wholesale costs making up around a third of a residential electricity bill, these low prices are welcome relief for Australian households and small businesses facing financial hardship because of COVID-19.
Wholesale gas market prices also fell by almost 50 per cent compared to the same period in 2019, with the Gas Supply Hub price sliding to $3.85 per gigajoule.
AEMO’s report follows the recent findings of the Australian Competition and Consumer Commission (ACCC) that found retail prices paid in 2019 were lower than 2018, due to a range of factors such as lower wholesale costs and customers using the Government’s Default Market Offer to get a better deal.
Minister for Energy and Emissions Reduction Angus Taylor said falling wholesale and retail energy prices highlighted how the Government’s policy action was having the desired effect.
“Cheaper energy supports Australian industry, creates jobs and puts more money in the pockets of hard-working Australians,” Minister Taylor said.
“The Government is committed to bringing down the cost of energy for all Australians. We know that when Australian households and businesses pay less for their energy bills, they have more opportunities to get ahead.
“And our action is working. Government reforms are delivering more affordable, reliable energy and we will continue to pursue policies that ensure Australians are getting the best deal.”
Falling wholesale electricity prices must be passed on to consumers and the Government’s Big Stick Legislation will ensure this happens.
“Our Big Stick legislation is dealing with misconduct in the electricity sector and ensuring retailers put customers first by passing on reductions in wholesale prices,” Minister Taylor said.
“Since the Big Stick legislation was first introduced into Parliament, there have been 13 straight months of wholesale price reductions on the previous year. We expect the energy companies to pass this on.
“There are also better offers in the market, with the ACCC finding smaller retailers are offering more competitive prices. It is therefore vital that consumers shop around to find the best deal available to them.”
AEMO also found the COVID-19 restrictions had an impact on energy demand, particularly in Victoria.
The report also reinforced the Clean Energy Regulator’s findings there has been a record uptake of household solar during the COVID-19 pandemic.
Residential and small business customers can review the competitiveness of their energy plans using the Government’s free price comparator website energymadeeasy.gov.au