Australian Energy Regulator approves $3.9bn revenue for SA Power Networks for 2020-25
Electricity prices could finally be heading lower with the poles-and-wires part of a household bill to fall from July, under a ruling from the Australian Energy Regulator.
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South Australian households will get an average $40 cut on their annual electricity bills from next month, under a ruling today by the Australian Energy Regulator.
The regulator also has accepted a nation-leading structural change to how we pay for electricity which encourages consumers to use appliances like washing machines and pool pumps in the middle of the day under a “solar sponge” tariff.
The cut to average bills will flow from the regulator deciding distributor SA Power Networks can earn $3.9 billion over five years, starting on July 1.
“We have largely supported what SA Power Networks proposed to us because of their strong consumer engagement,” regulator chair Clare Savage said.
“Consumers were clear in their support for lower prices, increased spending to accommodate more solar photovoltaic and new tariff structures.”
SA Power Networks’ poles and wires supply 99 per cent of SA and make up just under a third of the residential bill.
Ms Savage said the decision allows for upgrades to the network to accommodate he high uptake of rooftop solar but the regulator knocked back some proposed capital works.
“Rooftop solar is now mainstream for SA households and businesses but that has an effect on the operation of the network,” she said.
“We’ve funded increased capability to help the network cope with this change.
“We’ve also approved discounted daytime tariffs to encourage consumers to use power when the sun is shining.”
As well as a cheap “solar sponge” tariff from 10am to 3pm to soak up excess power, the new structure will have a low tariff rate from 1am to 6am.
However, tariffs will rise above the base rate during the breakfast rush and late afternoon and evening.
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The structural change to tariffs will only be possible where households have modern, time-of-use meters and only where the retailer offers a suitable contract.
Major retailers are considering how to apply the new tariffs but are not expected to introduce them immediately.
The price fall also follows from a lower rate of return on assets and SA Power Networks reducing operating expenditure.
Final bills will also depend on other components — transmission, government schemes, retailer margins and wholesale generation prices.
So far this year, wholesale prices are about 40 per cent lower than 2019 at $63MWh, with SA cheaper than NSW and Victoria but above Tasmania and Queensland, according to Australian Energy Market Operator data.