Post on June 13th, 2015
How much does Electricity Cost in Australia?
As you take a look at your monthly power bill, you may be wondering to yourself why on earth electricity prices continue to skyrocket no matter what you do to conserve and reduce your use of power on a day-to-day basis. Sound familiar?
It’s no secret to Australians that electricity prices are on the rise. Over the past decade we’ve seen a massive increase in the retail cost of electricity. But how much are prices expected to increase within the next few years?
The good news is, according to the Australian Energy Market Commission (or AEMC), consumers could finally see some modest relief from increasing energy costs over the next few years.
The Cost of Electricity in Australia: How we Compare Worldwide
Believe it or not, Australians pay some of the highest electricity prices in the developed world. On average, Australia’s residential electricity prices are more than twice those of Canada and the USA. For South Australian residents, it’s closer to three times the price.
Differing network and generation costs means that there are significant state by state differences in the price of electricity. However, in all states in Australia we are paying well above the worldwide average.
Australia’s Electricity Cost: Recent Price Trends
The rising cost of electricity has caused serious concern throughout Australia, especially in Victoria, South Australia, and New South Wales. These states have been particularly affected by skyrocketing prices, and electricity disconnections due to financial hardship reached record-breaking levels from 2014 to 2018.
As the total cost of electricity paid by residential and business customers includes the costs of wholesale generation, transmission, distribution, and environmental schemes as well as the final retail margin, changes in any of these areas can drastically change your yearly energy bill.
Increasing retail electricity costs over the past decade were primarily caused by:
- Volatile Wholesale Prices
- Increasing cost of Distribution
- Introduction of the Carbon Tax
- Closure of large-scale Generators such as Hazelwood and Northern
On a smaller scale, increasing transmission costs have further increased the price of electricity in some areas of Australia.
Australia’s Electricity Cost: Price Predictions
On a national level, residential electricity prices and overall yearly bills are expected to decrease in the period from 2017-18 to 2020-21. According to the AEMC, the next few years should see modest reductions of between 1% and 4.5% to retail electricity prices in each state. While this figure won’t have Australians reaching for the champagne, it’s a move in the right direction after years of increasing costs.
This expected price decrease is based on wholesale electricity costs reducing in Victoria, South Australia, South East Queensland, and Tasmania. The AEMC estimates an additional network availability of 9,732 MW of accredited, committed or expected electricity generation and battery storage. While this extra generation and storage capacity will lower the overall wholesale prices of electricity, it will need to offset predicted price increasing in other areas.
The prices of coal and gas are set to rise over the period from 2017-18 to 2020-21. On top of this, the AEMC predicts a slight increase in network costs, and higher environmental costs associated with the Small-scale Renewable Energy Scheme (SRES).
Ultimately, changes in retail pricing are also drastically affected by competition in the retail market and the way retail companies compete. Consumer buying power and a nationwide move to demand lower prices by switching to companies offering the lowest prices will ensure suppliers offer the best retail prices possible.
How Can You Save on the Cost of Electricity in Australia?
Comparing electricity prices and finding the cheapest retailer in your area is the only way to ensure you are paying the lowest price possible for your electricity. Comparing every 12 months will make sure you continue to get the best price. If consumers across the country switch from expensive standing offers to the company with the cheapest market offer, increased competition will see retail margins remain low.