This report is intended to identify the trends, and report on the drivers of those trends, in Australian residential electricity prices. Consistent with the terms of reference set by the Standing Council on Energy and Resources, it does this for each jurisdiction and at a national level for the period 2011/12 to 2014/15. It is the third report of this nature prepared by the Australian Energy Market Commission (AEMC).

This report does not provide, and should not be regarded as providing, forecasts of future residential electricity prices and particularly of the regulated retail prices which are set by jurisdictional regulators.

Scope of this report

The terms of reference direct the AEMC to focus its analysis on the possible future retail electricity prices over the period from 2011/12 to 2014/15, and the factors that affect those prices and the possible future trends, for a representative set of residential customers in each state and territory.

The estimates of prices and trends in this report are based on the modelling undertaken by Frontier Economics, and information and data from jurisdictional governments and regulators, and the Australian Energy Regulator. References to estimations in this report are therefore based on these inputs.

With the exception of Victoria, this report focuses on regulated prices offered by retailers in each jurisdiction. As the residential customer category is often combined with other categories of small customers for the purposes of offers, references to residential customers in this report may also incorporate other categories of small customers, such as small business customers.

The projected residential electricity prices in this report:

• are for standard supply arrangements only. We understand that in some jurisdiction more than 50 per cent of customers are supplied under market offer arrangements; andassume certain consumption levels for a residential customer in each region.
• assume certain consumption levels for a residential customer in each region.

The retail electricity price movements for Victoria are based on published single rate standing offers: these will tend to overstate the actual prices paid by the majority of customers that are receiving supply on market offers.

As the data collection underlying this report was largely completed by late 2012, not all subsequent policy initiatives or regulatory changes could be included, such as:

• the recent change made by the Northern Territory Government with respect to the 1 January 2013 regulated electricity price increase;
• the South Australian Government decision to deregulate electricity prices from 1 February 2013 and their agreement with AGL to reduce regulated retail prices for eligible customers by 9.1 per cent;
• the outcomes of the Queensland Competition Authority’s draft retail price determination, released in February 2013; and
• determinations by the Australian Energy Regulator in relation to cost pass-through applications for feed-in tariffs for ActewAGL (Australian Capital Territory) and Ergon Energy and Energex (Queensland), published on 10 January 2013, and in relation to a cost pass-through application for the National Energy Customer Framework for ActewAGL (Australian Capital Territory), published on 18 January 2013.