By Mike Foley and Nick Toscano
Soaring electricity bills will worsen in the next two years, the energy regulator warns, because the eastern seaboard’s wholesale power prices have already hit record levels this year and will be pushed even higher by rising fossil fuel costs.
“High international energy prices will continue to put pressure on domestic prices, and forward markets continue to indicate high domestic gas and electricity wholesale prices will continue into 2023 and 2024,” said the Australian Energy Regulator in its quarterly market report released on Wednesday.
Power prices are expected to keep rising into 2024, the Australian Energy Regulator says. Credit: Jessica Shapiro
Wholesale prices – what electricity retailers pay for power supply before they on-sell it to households – reached a record high in the second quarter of this year, ranging from $210 a megawatt hour to $257 a megawatt hour.
Forward contract prices for wholesale electricity, which indicate the future cost of retail power and household bills, are even higher and are selling for up to $345 a megawatt hour into next year.
Quarterly wholesale gas prices averaged around $26 a gigajoule, up from $10 a year earlier.
Last month’s federal budget said retail power prices had already risen more than 20 per cent, and were forecast to rise a further 30 per cent next year.
Federal Treasurer Jim Chalmers says all options on the table to rein in power prices, which could include a price cap on coal and gas or new taxes on resources companies that generates revenue to spend on direct subsidies for households and businesses.
“The chaos in energy markets brought about by Russia’s war in Ukraine is really the defining challenge in the global economy,” he said.
Chalmers is still weighing up the options and is hoping to announce a decision by the end of the year.
He said on Tuesday that “our first preference is to try and find a regulatory solution here, rather than a tax solution” to limit gas and coal prices and drive down electricity prices.
NSW-based coal miner Whitehaven on Wednesday attacked the Albanese government over a range of issuing, including its industrial relations legislation, and said plans to cut industry emissions under pollution caps to be imposed via the so-called safeguard mechanism was equivalent to a carbon tax.
“There are ominous signs emerging that the government is taking Australian mining for granted,” Whitehaven said in a statement.
“Further taxing our coal exports won’t make electricity cheaper for Australian consumers, it will just cost jobs and undermine our reputation as a reliable trading partner... the government must clarify its position on a possible new tax.”
Last week, NSW Minerals Council chief executive Stephen Galilee said he feared miners could be hit with new taxes which would be a “significant broken election promise”, while the Minerals Council of Australia chief executive Tanya Constable warned any move to cap coal prices risked the nation’s “economic recovery” and job losses.
An Albanese government spokesperson said it had “made a clear commitment” during the May federal election to boost people’s salaries and more recently pledged to bring down soaring power prices.
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