Major falls in wholesale electricity costs and new laws requiring retailers to pass on cuts are likely to result in lower electricity bills despite residential consumption rising, according to the Australian Competition and Consumer Commission (ACCC).
Chair of the ACCC, Rod Sims said the Commission’s latest electricity markets report, Inquiry into the National Electricity Market (NEM), showed COVID-19 restrictions significantly impacted electricity bills, with households using 10 per cent more electricity and small businesses using 17 per cent less.
“While the pandemic changed electricity consumption patterns in 2020, average wholesale spot prices, which are the prices that retailers pay day-to-day for uncontracted electricity, fell by 50 per cent between mid-2019 and early 2021,” Mr Sims said.
“This has been partially offset by higher spot prices in May and June, due to several factors including a major generator outage in Queensland,” he said.
“Overall, however, the ACCC expects retailers’ wholesale costs to remain low relative to recent years.”
Mr Sims said the ACCC was examining whether electricity retailers had lowered their prices in line with the wholesale price reductions.
“We expect 2021 to be a better year for households and small businesses as large reductions in the wholesale cost of electricity continue to flow through to people’s bills,” he said.
“The ACCC is currently investigating a number of electricity retailers’ prices to see if recent wholesale price reductions are being passed on to consumers, as required by law.”
Mr Sims said the Prohibiting Energy Market Misconduct (PEMM) law that came into effect in June 2020 required electricity retailers to make reasonable adjustments to their prices in line with their costs of procuring electricity.
He said ACCC analysis, conducted in March this year, revealed that if all customers in eastern and southern NEM States switched to cheaper deals that were available, or benefited from retailers lowering the prices of their existing plans, the annual savings would be about $900 million compared to June 2020.
The ACCC’s 60-page Report can be accessed at this PS News link.