Policies may hit power bill drop

QUEENSLANDERS’ annual power bills may fall by $200 next year but the good news comes with a warning.

In its latest annual residential price trends report released today, the Australian Energy Markets Commission says a typical Queensland household can expect a drop from an average yearly bill of $1465 in 2017-18 to $1264 by 2019-20 as wholesale prices retreat.

The commission – which advises governments on energy matters – said the wholesale price of power in Queensland rose 22 per cent in 2017. It is now expected to fall by a total of 31 per cent over the next two financial years.

It is not just Queensland that is set to finally get some relief from rapid bill increases.

The AEMC expects reductions across Victoria, NSW and South Australia.

That forecast is based on the effect of new, mainly renewable generation coming into the national electricity market. However, AEMC chairman John Pierce is issuing a warning.

“Without investment in replacement capacity, wholesale prices will go up again and remain volatile,” he said.

Also, before Queenslanders get too excited about the AEMC’s forecast of price relief, in its equivalent report in 2015 it failed to accurately forecast that bills would surge due to seismic shifts in the wholesale market. Wholesale electricity prices are now the single biggest driver of change in residential electricity bills, taking over from network costs. Demand is not increasing. And while extra green power should lower wholesale prices, the AEMC says environmental policies will further add to bills.

That will increase bills by $13 a year by 2019-20, when funding green schemes will cost an average household in this state $69.

For those who have never shopped around, the AEMC says finding the best offer could save $212 a year compared to standard pricing.

About half of all southeast Queensland households have already shopped around and found a better deal.

In 2015, the AEMC predicted Queensland prices would rise rise by an average of less than 1 per cent a year for three years. These predictions have dramatically understated what has happened so far.

That was because there were major power station closures such as the retirement of Victoria’s Hazelwood coalfired plant which was not anticipated at the time.

The AEMC’s estimates do not take into account the Paluszczuk Government’s Affordable Energy Plan policy announced in October.