26 September 2023

Electricity switches on big price rises

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The Queensland Competition Authority (QCA) has released its final determination on regulated retail electricity prices.

The determination will apply to customers on standard contracts in regional areas from 1 July.

Chair of the QCA, Flavio Menezes said the significant increase in electricity prices was mainly due to an increase in energy costs.

“In particular, wholesale energy costs, which are the costs that retailers incur when purchasing electricity from the National Electricity Market (NEM),” Professor Menezes said.

“Retailers adopt a range of strategies to reduce their exposure to changing prices in the NEM, including hedging their risk through the purchase of ASX contracts. This allows retailers to lock in a price for electricity that they will deliver to consumers at a later date.”

He said wholesale energy cost estimates reflected a significant increase in ASX contract prices, driven by market expectations of higher spot prices and greater price volatility.

“This is likely due to higher coal and gas prices, which have been impacted by the war in Ukraine, as well as uncertainty around the availability and reliability of coal-fired power plants, which impacts the supply-demand balance in the Queensland region,” Professor Menezes said.

“This will result in a 28.7 per cent increase in the annual bill for a typical residential customer (on tariff 11) and a 26.8 per cent increase for the typical small business customer (on tariff 20).”

Professor Menezes acknowledged the increases could place additional pressure on households and businesses that were already facing cost-of-living challenges.

“For customers facing hardship, there are range of Government concessions, rebates and other forms of assistance available,” he said.

The Authority’s final determination is available on the QCA website at this PS News link.

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