Australian Energy Regulator says power prices down but election promise question remains

The nasty peak in power prices is behind us, but has the state government met its election pledge? Depends where you start from.

The state government has seized on a new report about electricity prices, saying it proves they have met an election promise.

Analysis by national agency, the Australian Energy Regulator, shows prices have come down from the peaks – but follows a warning from another national agency prices will go up again.

Deputy Premier and Energy and Mining Minister Dan van Holst Pellekaan said on Wednesday the AER report showed prices for the average South Australian home had fallen by $422 a year to $1784.

“That is even better confirmation than the Essential Services Commission of SA (ESCOSA) provided – their figure was $303,” Mr van Holst Pellekaan said.

“We now have two consumer-focused organisations … both saying we have delivered our election commitment to reduce the cost of electricity.”

Energy and Mining Minister Dan van Holst Pellekaan with Premier Steven Marshall. Picture: Naomi Jellicoe

But there is an argument about whether the promise really has been met and questions about where prices will go next.

The promise was made in the Liberal Energy Solution election policy statement. It said wholesale – or generation – prices would fall because of several initiatives, including building an interconnector to NSW.

“This fall in wholesale prices would see an average SA household’s power bill fall by $302, compared to the latest 2016-17 prices,” the policy document said.

ESCOSA surveys retail electricity offers annually and reports to the state government.

It says prices were $1976 a year in 2016-17.

Prices rose to $2244 in 2017-18, then fell to $1941 in 2020-21.

Compared with the written policy, prices have fallen by $35 a year.

Mr van Holst Pellekaan rejected “ticky-tacking” on that detail and said prices should be compared over the period since the government took office in 2018.

Compared with prices at June 30, 2018, prices have fallen $303.

Opposition Energy spokesman Tom Koutsantonis said the government had failed.

“Whichever way the Liberals slice and dice the numbers, they have failed to deliver their promise,” Mr Koutsantonis said.

Both ESCOSA and the AER show falls from 2017-18 to last financial year but come up with different figures because they use a different methodology.

They use different consumption figures. Then, ESCOSA uses a simple mean while the AER uses a median to calculate the average offer.

A third agency – the Australian Energy Market Commission – also reports on prices, but focuses on trends ahead.

The commission, which provides advice to governments, said last week it expects SA prices will rise by $86/year in 2022-23.

It said cheap renewable energy had driven down wholesale prices in SA, but network costs would push prices higher next financial year before they fall again in 2023-24.

Mr van Holst Pellekaan was sceptical about the commission’s estimates.

“The AEMC report is a theoretical one looking into the future,” he said.

The commission has not included the effect of Project EnergyConnect, the $2.3bn NSW interconnector.

That project will cost SA households $17/year from 2023-24.

It is tipped to save households a net $100/year, because of cheaper wholesale prices.

But there also is dispute on that because wholesale prices are already lower than were predicted in the cost-benefit analysis.