Power prices return to fore of federal election campaign

Labor is promising to save Australian families $275 a year as new figures reveal electricity costs have more than doubled in a year.

Labor has promised to slash power prices after new figures revealed a major surge in the price of electricity.

Opposition frontbencher Jim Chalmers was out campaigning in Sydney on Friday where he said only Labor had a plan to bring down power bills, with a promise of an average $275 annual reduction by 2025.

Wholesale electricity prices on the National Electricity Market (NEM) have soared by 141 per cent in the past year - and 67 per cent in just the past three months.

The leap has been blamed on a global spike in the cost of coal, but Labor has seized on the increase to criticise the Morrison government for not doing more to make everyday living cheaper.

“This is further proof the cost of living is going up, only Labor has a plan to bring down power prices,” Dr Chalmers told reporters.

“Power prices are going up. Healthcare is becoming harder to access and harder to afford. Groceries are going through the roof and petrol. This is a cost-of-living crisis on Scott Morrison’s watch.”

Jim Chalmers has vowed Labor will reduce power bills as the price of electricity returns to the fore of the campaign. Picture: Tim Hunter

Dr Chalmers said Labor would add cheaper and cleaner energy to the nation’s power grid while the Coalition was “having a barney about whether or not they believe in net zero”.

Nationals backbencher Matt Canavan has this week reignited the ugly debate within the government over carbon neutrality by claiming the net zero by 2050 target was “dead”.

The Coalition earlier this month had claimed Labor’s $20bn plan to upgrade the nation’s transmission grid would see the average annual power bill leap by $560 over the next decade.

Power prices again came to the fore of the election race on Friday as the third week of the official campaign draws to a close.

Critics say surging power prices in Australia are the opposite of what the government promised when it staked the country’s bet on fossil fuels.

In Queensland, record demand saw the average price of wholesale electricity for the quarter surge to $150/MWh, the state’s second highest rate for any quarter since 1998.

Since at least 2019 the government has aimed to keep the cost of wholesale energy below $70/MWh.

Energy Minister Angus Taylor has continued to spruik a target of $70/MWh for wholesale electricity. Picture: NCA NewsWire / Gary Ramage

The Australian Energy Market Operator (AEMO) said the increase was a mix of record demand, coal generator outages and higher electricity-generating fuel costs.

AEMO Executive General Manager Reform Delivery, Violette Mouchaileh said the rising cost of electricity coincided with the surge of global coal prices to record levels.

“Compared to the first quarter of 2021, over 3000MW of black coal offers shifted from lower-price band to above $60/MWh – the largest year-on-year quarterly change since 1998,” she said.

She noted that wholesale prices in Queensland and NSW were significantly higher than in southern states, partly due to transmission difficulties.

Green energy advocates were scathing of the figures which they say demonstrate fossil fuels are costing Australians more.

Green energy advocates blame the price hikes on the unreliability of fossil fuels. Picture: NCA NewsWire / Daniel Pockett

The highest electricity prices in Q1 2022 were in QLD and NSW, which are also the states that are most dependent on fossil fuels,” Managing Director of Energy Synapse, Marija Petcovich said.

“As long as our electricity system remains reliant on fossil fuels, we will continue to be vulnerable to price shocks in coal and gas markets,”

A heatwave in Queensland combined with reduced generation availability on 1 February led AEMO to dispatch Reliability and Emergency Reserve Trader (RERT) reserves for four and a half hours to maintain system security – costing an estimated $51 million.

Surging prices were unable to be stopped by record amounts of wind and solar in the grid, which in the first quarter of this year grew by 743MW over the period of a year to 4,190MW.

“The reason power prices have risen is not because of too much renewable energy but in fact not enough leaving us exposed to volatile international markets for coal and gas,” Director of Analysis and Advisory at Green Energy Markets, Tristan Edis said.

“This is the complete opposite of what Angus Taylor and Scott Morrison told us at last election.”