South Australian electricity bills tipped to drop by $300 over two years but could spike again

POWER prices in SA are expected to drop by $300 over the next two years — but there’s a price “rollercoaster” coming.

SOUTH Australian households are tipped to save $150 on their power bills in the coming year and prices are expected to drop a further $150 the following year.

But consumers are being warned the relief may be short-lived because they are “riding the power-price rollercoaster”.

Expert modelling shows the price drop in SA — 7.3 per cent over the next two years — was among the biggest savings in Australia driven by new wind and solar generation.

It brings the state’s average annual household bill down to $1600, about the price paid last year prior to huge bill increases in July of up to 20 per cent.

But South Australians would still be paying much more for power than NSW and Victoria, where typical household bills would be about $1100.

The Australian Energy Market Commission believes there is a two-year window in which to put a national energy policy in place before prices surge again.

Modelling released last month for the Turnbull Government’s new energy policy showed that a National Energy Guarantee would stabilise future electricity costs.

The AEMC modelling revealed the cost of electricity generation in SA had increased by 35.9 per cent following the closure of the Port Augusta’s coal-fired power station and Hazelwood in Victoria.

It found high gas prices also contributed to the steep rise because SA now relied heavily on gas fired power stations.

While generation costs were set to dip 22.9 per cent in each of the next two years as a result of new renewables coming into the market, the cost of environmental and security costs was a rising component of bills.

The AEMC report stated that planned renewables would exert downward pressure on wholesale prices but only in the short term.

“This will impact the medium to long-term financial viability of existing generators, such as coal-fired generators, and at the same time place upwards pressure on the price of hedging contracts due to the reduced supply,” the report stated.

The report did not consider any proposed policies such as the NEG because of the “uncertain, unknown or long-term nature of any policies or mechanisms”.

It stated that in the medium to long term, changes in government policy would impact on investment decisions which would then flow through to prices.

Federal Energy Minister Josh Frydenberg will on Monday announce new measures to make it easier for Australians to get cheaper electricity deals. The Government will reveal it has asked the AEMC to ban power retailers from offering “discounts” which are actually more expensive than their standard rate.

The rule change is designed to prevent electricity retailers from operating in a way that is confusing for customers.

“Changing the rule will provide consumers with the confidence that a discount is exactly that — a discount,’’ Mr Frydenberg said.