Bill pain as power costs rise

Coal, gas and rain are to blame

WHOLESALE power prices have jumped by 150 per cent in the past year amid soaring coal and gas costs while heavy rain dampened solar output, Origin Energy said.

Wholesale electricity spot prices surged in the first three months of 2022 to average $90 per megawatt hour across the power grid, Origin data shows.

That marks a 150 per cent bounce from the first quarter of 2021 when prices were just $36MWh, and a 58 per cent jump from the last three months of 2021, when prices averaged $57MWh.

The huge bump, which if prolonged will filter through to higher household bills, backs up official data released on Friday from the Australian Energy Market Operator, which found similar inflation had hit the energy sector.

Origin, which has accelerated the closure of Australia’s largest coal plant by seven years to mid-2025, said elevated coal and gas fuel costs were partly to blame after Russia’s invasion of Ukraine roiled international commodity markets and created a new squeeze on supplies.

A volatile La Nina summer also played its part. While hot weather saw Queensland hit record market demand on March 8 and NSW surge higher in February, the two states were also hit with lower solar production as extreme rainfall in March dampened output.

Coal outages in Queensland also hiked pressure on the power grid while Origin called out periods of high South Australian prices driven by choppy renewable generation and interconnector constraints, which curbed electricity supply from Victoria.

Origin also pointed to a slump in coal output from its Eraring coal plant, down 16 per cent for the financial year to date due to coal delivery constraints from its main supplier.

“Wholesale prices across the national electricity market have risen significantly compared with the prior period driven by higher coal prices, lower solar output associated with the La Nina summer and baseload outages across the national electricity market,” Origin chief executive Frank Calabria said.

Electricity sales volume for the March quarter rose 7 per cent on-year, with a 16 per cent lift in business volumes on customer wins more than offsetting a 4 per cent decrease in retail volumes on lower usage.

Its APLNG revenue rose 15pc on the prior quarter to $2.57bn and financial year to date revenue more than doubled on higher LNG and realised oil prices while North Asian LNG market prices delivered in the quarter averaged $US31/mmbtu, as buyers clamour for supplies.

High coal prices and breakdowns of coal units underscored the need to speed up a move to renewables, The Australia Institute said.