Victoria wholesale power generation price worse than SA, ACCC finds

Victoria is overtaking SA in the unwanted title of having the most expensive wholesale electricity prices, the ACCC says. But, first there’ll be a spike in prices next summer as Victoria and SA struggle to keep cool.

Victoria is overtaking South Australia in the unwanted title of having the most expensive wholesale electricity prices, the Australian Competition and Consumer Commission says.

NSW prices will also exceed SA from mid-2020 according to the ACCC’s market soundings.

But, first there’ll be a spike in prices next summer as Victoria and SA struggle to keep cool.

“The forward curve has broadly shifted up after the recent extreme price events in Victoria and SA,” the ACCC said in reference to the January heatwave where prices hit a ceiling for an extended period.

ACCC chair Rod Sims

The forecasts are made in the first of a series of six-monthly monitoring reports on the electricity market the ACCC was mandated to deliver in the wake of its inquiry into retail pricing last year.

“Under this new inquiry, we will be closely monitoring all parts of the supply chain in the electricity sector for the next seven years, in an effort to improve affordability,” ACCC chair Rod Sims said.

“We will be looking at the behaviour of suppliers with the objective of helping consumers access affordable electricity.

Mr Sims said progress was being achieved on some recommended reforms to the “dysfunctional state of energy retailing” but more action was needed.

He was pleased by the Federal Government setting default market offers to replace standing offers which were originally intended as a safety net for consumers when the market was opened up to private sector competition.

Future wholesale prices in the national electricity market.

The Federal Government is pursuing the default market offers despite opposition from industry and business groups.

The ACCC remains highly critical of retailers, especially confusing contracts based on discounts.

It highlights the example of an offer of 34 per cent deducted from the bill but if the conditions were not met the annual price would increase by $859 — or $364 more than the most expensive offer without a discount.

“These additional costs reflected unreasonable penalties for not meeting conditions, often for those least able to afford it,” the ACCC said.