Renewables to push down power costs
POWER bills are set to fall next year but Australians are warned the drop can only last if electricity companies keep building new generation.
The Australian Energy Market Commission’s annual report on price trends found wholesale electricity costs are the main driver of household costs, in contrast with recent years when network costs pushed prices up as companies upgraded poles and wires.
Australians’ average annual power bill is expected to drop from $1433 in 2017-2018 to $1359 in 2018-2019 and to $1261 the following financial year.
Chairman John Pierce said the sharp hike to bills interstate in the past year was caused by closing Hazelwood and Northern coal-fired power stations without replacement generation as well as the high cost of gas.
The commission expects annual household bills to drop by about $200 over the next two years as a large amount of cheap wind and solar power contracted under the renewable energy target becomes available, bringing bills back into line with 2016 levels.
But the commission warns lower wholesale prices over time could lead to more coalfired plants closing sooner than expected as they would not be commercially viable.
“Without investment in replacement dispatchable capacity, wholesale prices will go up again and remain volatile and the rollercoaster will be repeated,” Mr Pierce said.
The Australian Energy Council, representing major electricity companies, expects households and business will welcome the news prices appear to have hit a peak.
But chief executive Matthew Warren also warned Australia still had to push on with national policy reforms to make sure costs did not spike again when the next round of older power stations closed.
The Federal Government is developing its national energy guarantee policy, expected to encourage new investment in generation capacity that can be called upon when needed and that has low emissions.
Meanwhile, a new rule put in place yesterday bans electricity retailers from offering customers “discounts” on rates that are higher than the company’s standard plan.