No escape from hot weather or high power prices this summer
Households and businesses are unlikely to receive any relief from high electricity prices until July next year, despite a big fall in wholesale power prices in the past 12 months.
Although a milder winter put further downward pressure on wholesale prices, a long, hot summer is expected to increase demand and could keep prices higher for longer.
Two recent reports from the Australian Energy Regulator and the Australian Energy Market Operator showed wholesale power prices were as much as 70 per cent lower than a year ago.
Most power companies have long-term contracts locked in.
But Gavin Dufty, manager of policy and research at the St Vincent de Paul Society and who keeps a close eye on retail energy deals, said there had not been any reduction in retail bills, the bulk of which were the result of rates locked in on July 1.
“I believe households and small businesses are unlikely to see anything until possibly the start of next financial year,” he said.
“The way retailers contract in the wholesale market is on long-term contracts, which means our prices are locked in until these contracts are renegotiated.
“Furthermore, retailers tend to reprice their portfolios at the start of each financial year to reflect changes in the underlying cost of poles and wires, which are reset at this time by the AER.”
Mr Dufty said while wholesale prices were settling back down to a “new normal”, there were upward pressures in other parts of the system. These included the cost of capital for regulated transmission and distribution companies, which would be recouped through consumers.
Double-digit power price rises were in the national spotlight last year following the outbreak of the war in Ukraine and instability in the grid, which forced
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