Origin Energy cuts retail power prices from July
It’s been a standard political promise for years but this time a pledge to lower power bills is likely to come true – because it's the power company making the cut.
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Promises that electricity prices will fall are finally coming true – with at least one major retailer cutting prices by an average 5.6 per cent, or $127, a year from July.
Falling wholesale prices from generators and reduced network costs announced last week will see Origin Energy cut prices to households and businesses.
Gas prices will be held steady for households and cut for small business from mid July.
“We are pleased to be lowering our electricity prices for customers from July 1, which we hope will provide welcome relief for South Australians at a time many in the community are being financially impacted by coronavirus,” Origin executive general manager retail Jon Briskin said.
“Lower wholesale electricity and network costs have driven the reduction in electricity tariffs, while Origin has chosen to absorb some increased gas network costs to keep gas prices flat for residential customers.”
The price cut estimate from an annual bill of $2268 this financial year is based on a weighted average for all Origin residential customers.
Origin said small business average bills would fall by 5.5 per cent or $372/year.
Origin has just over 26 per cent of SA’s market, according to the Australian Energy Regulator.
Other retailers, including AGL which holds nearly 38 per cent of the market, Simply Energy which has grown to 11 per cent and EnergyAustralia with 8 per cent, are yet to announce any changes to offers.
Federal Energy and Emissions Reduction Minister Angus Taylor welcomed the price cut.
“The Government has built a strong toolkit of options, like the Big Stick and the Default Market Offer, to make sure that wholesale and network cost reductions are passed through to all consumers,” he said.
Origin’s move comes after the Australian Energy Regulator last week ruled that network charges must fall.
In approving a five-year revenue plan for distributor SA Power Networks, the regulator estimated the network component of bills should fall by an average $40/year.
It also cleared the way for significant structural change with distribution tariffs to vary by time of day, creating a “solar sponge” at 25 per cent of the base rate in the middle of the day but peak rates at 125 per cent in the morning and afternoon-evening.
Retailers are unlikely to reflect those structural tariff changes in residential offers immediately.
Wholesale prices in SA have fallen substantially.
So far this year, wholesale prices are averaging about $63/MWh in SA, compared to $110/MWh for 2019, according to the Australian Energy Market Operator.
SA’s wholesale prices are below NSW and Victoria this year.