AEMC trends report projects $200 cut to SA power bills

Could your electricity bill finally be going down instead of up? The energy market’s rule maker says ‘yes’ - and a decent cut at that.

South Australian households are in line for a $200/year cut in their electricity bills, according to the Australian Energy Market Commission.

The commission, which sets the rules for the market and advises governments, said the big increase in solar generation was forcing down prices.

“It’s great to see prices falling,” AEMC chief executive Benn Barr said.

For its annual trends review, the commission estimates average prices by taking the lowest offer from each electricity retailer and weighting it for market share.

It expects SA prices to fall by 11 per cent, or just over $200, to $1680 a year by 2022-23.

Wholesale costs charged by generators, which make up about a third of bills, will be the biggest driver, falling by 41 per cent, it says.

In addition, environmental levies and the poles and wires’ costs were falling although retailers will greatly increase their slice of the final bill.

Australian Energy Market Commission chief executive Benn Barr.

While consumers may be sceptical, the commission’s projections are being seen in the real market.

SA is tracking at the lowest wholesale spot prices in the national electricity market this financial year, averaging about $35 per megawatt hour compared to $110 in 2018-19, although the usually expensive summer peak is yet to hit.

This month, SA’s average is about $16 per megawatt hour compared to NSW at more than $90.

Federal Energy and Emissions Reduction Minister Angus Taylor said the government’s “strong expectation” was for retailers to pass on lower prices to families and small businesses.

“After what was been a tough year for everyone, news that electricity prices are expected to continue falling in 2021 is a welcome relief,” he said.

The commission’s projections follow analysis by the Essential Services Commission of SA which recorded price falls in the past two financial years after a steep rise in 2017-18.

Mr Barr cautioned that the estimates were “projections not predictions”.

“Trends can change sharply in response to new policies and sudden market changes,” he said.

Previous price fall projections failed such as when the Port Augusta power station in SA and Hazelwood in Victoria were suddenly closed by their owners.

Demolition of the Hazelwood Power Station, Victoria.

On Thursday, NSW suffered a blow with an industrial accident seriously injuring a worker at Liddell Power Station, one of NSW’s main coal-fired generators which is slated to close in 2023.

One unit at Liddell is expected to be out of action for more than two months.

Meanwhile, the commission has pledged to make electricity bills simpler for households.

“Stakeholders generally agree that consumers find language and terminology confusing,” it said.

It has invited submissions on the issue before February 4.