CBA-backed Amber Electric slashes maximum power rates as wholesale prices fall

Unconventional power retailer Amber Electric has passed on falls in wholesale prices to its customers but for most Australians energy bills continue to burn.

Amber Electric co-founders Chris Thompson and Dan Adams. Picture: Louis Trerise

Commonwealth Bank-backed energy disrupter Amber Electric has slashed its maximum rates by as much as 11c a kilowatt hour as wholesale power prices fall.

But most Australians will still be left paying higher power prices, with the bigger and more established energy companies yet to pass on the wholesale dip.

Amber – founded by Dan Adams, who previously worked at Tesla and Boston Consulting Group, and his BSG colleague Chris Thompson in 2017 – is an electricity retailer that offers customers access to wholesale rates for a monthly fee of $19.

Wholesale pricing is different to regular power plans, given its variability. Power prices can spike above $10 a kilowatt hour briefly during moments of peak demand, while at other times can plummet into the negative – meaning customers are paid to use power – when there is plenty of supply in the grid.

Early afternoon on Monday, wholesale spot prices across NSW, Victoria, Queensland and South Australia were negative, ranging from -$99.99 to -$18.88 per megawatt hour, according to the Australian Energy Market Operator. But prices swing wildly as rooftop solar installations soar and ageing power plants are beset by reliability issues.

Amber has a price guarantee to shield customers from the volatility, offering maximum average usage rates, which it updates quarterly.

It has slashed its general usage maximum rate to 30.57c from 41.57c a kilowatt hour for the next three months for customers in Victoria’s Powercor network. For customers in the Jemena network in NSW and Queensland, Amber has cut its general usage maximum rate to 30.36c from 41.36c a kilowatt hour. Australian households and businesses have endured two years of power price increases of more than 20 per cent.

“Wholesale prices are now falling, but traditional retailers are putting their prices up 20 or 30 per cent. And basically the reason they’re doing that is because there was a huge crisis last year,” Mr Adams said.

“Many of the big retailers lost hundreds of millions of dollars and many small retailers went out of business last year. And so basically what’s happening is that the big traditional retailers are putting up their prices to make up for their losses last year and passing that on to consumers. But actually true wholesale prices are falling.”

CBA invested $20m in Amber during a Series B funding round in May 2021. At the time, CBA executive general manager for retail sales and service, Angus Sullivan, described the bank’s partnership with Amber as a “massive opportunity”.

Wholesale rates dip when there is more renewable energy in the grid, increasing supply.

“Using a CommBank Green Loan, customers can purchase and install clean energy products and with an Amber subscription, monitor when it’s cheaper to use energy to reduce their costs even further. For some customers, this means they are paying next to nothing each month for energy,” Mr Sullivan said at the time.

But pricing continues to be volatile. In August, AEMO warned of a shortfall in generation in South Australia and Victoria this summer, as a decade of insufficient power generation begins, with reliability not guaranteed.

The warnings have heightened concern about the country’s clean energy transition. Australia has set an aggressive target of having renewable energy generate more than 80 per cent of the country’s electricity by 2030, in an attempt to meet its net zero emissions goal by 2050 – which climate scientists say is vital to tackle climate change. Coal still accounts for two-thirds of power generation.

AEMO expects more than 60 per cent of coal-fired power generation to close in the next decade, and it is alarmed by the slow pace of building new renewable energy assets to replace them.