Market Review: Completed
On 21 December 2020 the Australian Energy Market Commission published its annual Residential Electricity Price Trends report. This is the eleventh annual residential electricity price trends report prepared by the AEMC at the request of the ministerial forum of Energy Ministers (formerly COAG Energy Council).
The report identifies changes in the energy supply chain cost components that are driving residential electricity prices and bills for each Australian state and territory (excluding the Northern Territory and Western Australia), and nationally, from 2019-20 to 2022-23 (the reporting period). By focusing on trends in the cost drivers of prices and bills, the report helps to focus attention on key sectoral issues.
The pricing and bill outcomes in this report do not constitute specific pricing and billing forecasts. Actual price movements will be influenced by how retailers compete, the dynamics of wholesale spot and contract markets, the outcomes of future network regulatory decisions, and changes in policy and legislation.
On a national basis, residential electricity prices and bills are expected to decrease until 2021-22 and increase in 2022-23. Overall prices fall despite increase in 2022-23. This trend is primarily driven by wholesale costs reducing in most of the states and territories in the first two years before increasing in the last reporting year following the closure of Liddell power station. Notably this tightening of supply and demand balance occurs at the end of the reporting period and may be affected by the recent announcement from the NSW government about the Electricity Infrastructure Roadmap. Prices fall markedly over the whole reporting period as new capacity enters the system.
Regulated network prices have been cut in response to falling distribution and metering costs and environmental costs are being driven down by cheaper large-scale generation certificates for increasing levels of renewable generation.
Australian Capital Territory is the exception to this national trend, with electricity prices and bills expected to increase over the period.
Media: Kellie Bisset, Media and Content Manager, 0438 490 041