Market Review: Completed
The Australian Energy Market Commission (AEMC) has published its 2016 Residential Electricity Price Trends report. This report is the seventh annual residential electricity price trends report prepared by the AEMC at the request of the Council of Australian Governments’ (COAG) Energy Council.
The report provides information on the electricity supply chain cost components expected to affect the trends in residential electricity prices for each state and territory of Australia from 2015/16 to 2018/19. These components are network costs, competitive market costs, and environmental and other policy costs.
The possible future price trends presented in this report are not a forecast of actual prices but rather a guide to what may drive prices, based on current knowledge, assumptions and legislation.
The 2016 report shows that residential electricity prices are expected to rise over the two years to 2018/19 in all jurisdictions, except for in Queensland (South East Queensland) and Tasmania. These increases are primarily driven by significant increases in wholesale costs following the retirement of the Hazelwood coal-fired power station in Victoria. Electricity bills are expected to be between $28 and $204 higher in 2018/19 across the National Electricity Market jurisdictions compared to a scenario where Hazelwood did not retire.
There is also expected to be a slight upward trend observed in network costs across a number of jurisdictions, although the current legal challenge of distribution of network revenues in New South Wales and ACT, Victoria and South Australia means there is some uncertainty associated with these estimates.
The trends in the underlying supply chain cost components and drivers of those trends will vary across jurisdictions and over time. This reflects differences in population, climate, consumption patterns, government policy and other factors across the states and territories.