Power prices set to plummet for the next two years

In another win for customers, hundreds of thousands of Victorian households are soon set to see their power bills plummet.

Power prices are set to plummet for the next two years, saving Victorian households hundreds of dollars on their electricity bills.

The Australian Energy Market Commission predicts prices will fall by 6.8 per cent this financial year and then 13.2 per cent in 2021/22.

This would save the average two-person household $217, cutting their annual bill to $915.

Major electricity retailers Origin Energy and EnergyAustralia have already handed Victorians an early Christmas present, delivering generous discounts in 2021.

In a new report, to be released on Monday, the commission forecasts further relief as the nation recovers from the coronavirus recession.

Commission boss Benn Barr said Victoria now had the lowest market prices in the country, with 95 per cent of customers on affordable market offers.

The other five per cent are on the regulated default offer, which was introduced by the Andrews government to provide a simple and affordable deal, but Mr Barr said better prices were available as he urged customers to shop around.

“Victorians still on the Victorian default offer could save up to $137 off their energy bill every year if they shopped around,” he said.

The commission expects electricity prices to rise by 5 per cent in 2022/23.

Over the next three years, the wholesale cost of generating electricity — a key factor in the size of consumer bills — is tipped to crash by 37 per cent in Victoria as more supply comes into the energy grid.

The Australian Energy Market Commission predicts prices will fall by 6.8 per cent this financial year

“The results in Victoria demonstrate how new sources of electricity generation like solar and wind are driving down wholesale prices,” Mr Barr said.

“It’s great to see prices falling because at the AEMC what drives us is how to keep the lights on and costs down in a decarbonising power system.”

Network costs are also forecast to decrease by 5.7 per cent over the next three years, while environmental costs are tipped to drop by 11 per cent.

“This report has been giving governments forward looking, policy relevant information on energy prices for more than a decade — but it is important to stress these are projections not predictions,” Mr Barr said.

“Trends can change sharply in response to new policies and sudden market changes.”

The Herald Sun revealed earlier this month that Origin was cutting prices by an average of 11 per cent next year, while E nergyAustralia promised to deliver a 6.1 per cent discount.

But household gas prices will increase in 2021.

Energy Minister Angus Taylor said lower energy costs were good news.

“After what was been a tough year for everyone, news that electricity prices are expected to continue falling in 2021 is a welcome relief,” he said.

“Electricity prices should not hold households and small businesses back.”

[e-mail]