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- Australian electricity prices hit their lowest point in nine years over the March quarter as a mild summer and growing uptake in solar panels softened demand
- The Australian Energy Regulator highlighted the lower prices in its latest Wholesale Markets Quarterly report, released this week
- The report showed lower average prices across the National Electricity Market (NEM) compared to previous years, ranging from $27 per megawatt-hour (MWh) in Victoria to $53/MWh in South Australia
- This is unusual given energy prices typically rise during the first quarter of the year as hot weather causes more air conditioner use
- Energy Minister Angus Taylor attributed the price falls to ongoing decreases since the introduction of the government’s 2019 “Big Stick” legislation
- He added that lower energy prices are part of the government’s plan to secure Australia’s recovery from the COVID-19 pandemic
Australian electricity prices hit their lowest point in nine years over the March quarter as a mild summer and growing uptake in solar panels softened demand.
The Australian Energy Regulator (AER) highlighted the lower prices in its latest Wholesale Markets Quarterly report, released this week.
Prices across the National Electricity Market (NEM) were lower than expected for the quarter, ranging from just $27 per megawatt-hour (MWh) in Victoria to $53/MWh in South Australia.
This $27 figure for Victoria marks the lowest first-quarter average electricity price in the country since 2012.
AER Chair Clare Savage said the lower first-quarter prices are an unusual trend in the NEM.
“In summer, and particularly Q1, wholesale electricity prices are usually higher with hot weather prompting more use of air conditions and higher demand for electricity pushing up prices, but Q1 this year war different,” Clare said.
“The milder temperatures during the past summer period and an additional 2500 megawatts of rooftop solar capacity drove lower demand and lower wholesale prices, which is good news for consumers because it could lead to lower bills,” she said.
State-by-state
Victoria’s $27/MWh was the lowest average quarter price on the National Electricity Market — the first time Victoria has claimed this achievement since 2017.
Tasmania had the next cheapest energy costs at $34/MWh. New South Wales recorded an average price of $29/MWh, Queensland $45/MWh, and Tasmania $53/MWh.
The AER said the higher South Australian prices were mainly driven by two “high priced events” caused by plant and network failures, as well as limited imports from Victoria. Nevertheless, average prices across the NEM are still lower than they have been in recent years.
For reference, the cheapest average price over the first quarter of 2020 was $44/MWh for Tasmania, with Victoria recording the highest average price of $109/MWh.
Even this, however, was a major improvement on the year before: average prices over the first quarter of 2019 ranged between $89/MWh for Queensland and $220/MWh for South Australia.
Western Australia and the Northern Territory have their own electricity systems and are not connected to the National Electricity Market grid.
“Big Stick” legislation
Minister for Energy and Emissions Reduction Angus Taylor said since the government introduced its “Big Stick” laws in 2019, there have been 19 months in a row of wholesale price reductions.
The Big Stick legislation was designed to keep energy companies accountable for misconduct and discourage anti-competitive behaviour so that price reductions could be passed on to consumers.
The Minister said with wholesale costs making up a third of residential electricity bills and far more for industry, the lower prices over the March 2021 quarter are expected to be passed on to Australian families and businesses.
“When energy prices drop, Australians have more opportunities to grow, prosper and get ahead,” Minister Taylor said.
“That’s what our government wants — Australians worrying less about their energy bills,” he added.
He explained that lower energy prices are part of the government’s plan to secure Australia’s recovery from the COVID-19 pandemic.
“We will continue to take action to ensure energy bills stay low and Australians have reliable and secure powers,” he said.
