Power transition trauma

Energy retailers warn of soaring prices

POWER prices in Australia will soar by at least 35 per cent in 2023 amid a choppy energy transition and the closure of coal plants, the nation’s fourthlargest electricity retailer said.

“Next year using the current market prices, tariffs are going up a minimum 35 per cent,” Alinta chief executive Jeff Dimery told an energy conference in Sydney.

“It’s horrendous, it’s unpalatable. We don’t want energy consumers getting their power bills and setting fire to them.

“There are real issues around energy pricing that we’ve got right now. And I think the public are going to get more attuned to that.”

One of the big three retailers – Origin Energy – said wholesale prices indicated a leap in electricity prices was likely to hit the market once new tariffs were set in July 2023.

“Based on current wholesale prices, those orders of magnitude sound familiar to me,” Origin chief executive Frank Calabria said.

EnergyAustralia said wholesale prices had soared, which would flow through to household bills.

“Just looking at the wholesale markets and buying as a retailer you’re selling retail energy, and you have to buy the energy in the wholesale market,” EnergyAustralia chief executive Mark Collette said.

“Just go back a year, wholesale electricity prices are up four times from $60 per megawatt hour to $240MWh. Gas is up from $10 a gigajoule to $50 on the current ACCC netback.

That’s four or five times, and it’s massive. It’s putting a lot of upward pressure on tariffs.”

Second-tier retailer Momentum Energy said there would be price hikes.

“I think we all see there are going to be big increases next year,” Momentum managing director Lisa Chiba said.

Energy Users Association of Australia chief executive Andrew Richards said large commercial and industrial customers would be bracing for impact in anticipation of a significant increase when they re-contract.

“Regardless of contract status, these cost increases will begin to hit in the coming 12 or so months. There doesn’t appear to be a viable escape route. We may end up reducing emissions through demand destruction,” he said.

The Energy Security Board (ESB) told the conference that extensions of coal plants beyond their closure dates were not required and there was no need to contemplate a plan B as part of the energy transition. The rapid fire exit of coal power plants this decade will require 45 gigawatts of new power supply by 2030, nearly the entire capacity of the current national electricity market, the Australian Energy Market Operator said.

However, the ESB said there was no appetite for keeping coal operating longer than current closure dates.

“I think the last thing anybody wants to see is any extension to the lives of coal-fired power stations,” ESB chair Anna Collyer told the energy conference in Sydney on Monday.