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Energy, Government Federal

Energy analysts: now is the time to shop around for better power prices

Climate Media Centre 3 mins read

Tuesday March 19 2024

Energy analysts say the Australian Energy Regulator’s draft Default Market Offer (DMO) will bring some much-needed bill relief to thousands of households and small businesses. Victoria’s Essential Service Commission has also drafted an average 6.4% drop in bills for household energy customers.

However not every region covered by the AER’s draft proposal will see the benefits of lower wholesale prices. Analysts are urging governments to support more households to install rooftop solar and batteries to bring prices down further.

The following analysts are available for interview today (Tuesday) :

 

Stephanie Bashir, CEO & Principal of Nexa Advisory  

Location: Stephanie is travelling but available for phone interviews and comments

Stephanie Bashir has expertise spanning the energy value chain in technical, commercial, strategic, policy and advisory capacities. She previously led the policy vision and strategy at AGL Energy as Senior Director of Public Policy.

Stephanie Bashir said: “It is good to finally see some of the drop in wholesale prices feed through to consumer bills. My message to consumers though is take control and shop around - the AER says the median market offer has dropped by 1-5% across most electricity distribution zones since 31 December 2023. But the most competitive market offers are now 18–23% below the DMO price.”

 

“This is also why we continue to advocate for measures to accelerate access to rooftop solar for all types of households and businesses - affordable clean energy shouldn’t just be for those who own their homes.”

 

“I recognise that the DMO price is a balancing act for the AER - we have seen in the UK what can happen if the regulated price is set too low - smaller and more innovative retailers fail and competition is reduced - that isn't good for consumers in the long run. We also need to highlight that the larger component is Network Costs which are 40% of the customer bill. That’s where reforms and scrutiny are needed. It's noteworthy that solar power is a key contributor to low wholesale prices which fell by 64% annual average as the AER highlighted earlier this year, making it a win-win situation for everyone, whether they have rooftop solar or not.”

 

Tim Buckley, Director Climate Energy Finance 

Location: Sydney

Tim Buckley said: “Sydney Ausgrid electricity consumers will see 3% retail price declines from 1 July 2024 under the Default Market Offer (DMO) draft ruling this morning, and for small to medium business customers a much more significant 10% drop. Prices for Endeavour Energy in the greater Sydney region will see retail consumer bills down 2-7% year on year, and for small business customers a drop of 4%. For Essential Energy customers bills will be flat year-on-year. Relative to the RBA's 3.3% CPI increase, this is welcome news. 

“Even with 50% declines in wholesale electricity prices over the calendar year 2023, NSW consumers are only seeing margin bill relief. Minister Penny Sharpe, we need to see accelerated DER deployments to expand local energy production and distributed storage systems, as well as upgrades to social housing and a solution to the split incentive preventing most renters from benefiting from rooftop solar and electrification of everything.”

“The more local supply and storage, the less need for ever expanding grid transmission costs, and no need to delay 5-10 years for this to be evaluated, then approved, then built. Time to act is now, we need Distributed Energy Resources (solar and batteries), Virtual Power Plants, Vehicle to Grid and Demand Side Participation (levers for companies to manage demand). NSW needs much faster planning approval of utility scale renewable energy developments, waiting 3-10 years for approval is ridiculous in the face of the concurrent current energy, cost of living and climate crises.”

“Queensland electricity retail prices draft DMO are much harder to comprehend - for retail consumers there’s a 0-3% rise year on year for households and flat rate for small business.. While wholesale prices have fallen by half, overdue investment in grid modernisation seems to have been passed through well in advance of the service to consumers.”

 

David Leitch, Principal at ITK

Location: Sydney

David Leitch is an energy and investment consultant specialising in analysis of electricity, gas and decarbonisation. David has 33 years of experience in investment banking research.

David Leitch said: “New supply should lead to downward pressure on prices in the next few years, but near term risks remain around controlled coal prices and the closure of Eraring. 

“This year’s increase in wires and poles costs shows that as consumers increasingly move to rooftop solar and batteries driving flat or falling volumes of consumption, the fixed revenue requirement for poles and wires will keep this component of prices expensive.”

 

ENDS

 


Contact details:

Jacqui Street, Climate Media Centre 0498 188 528 / jacqui.street@climatemediacentre.org.au

 

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