Household power bills are tipped to fall by more than 10 per cent in the next two years, but only after a spike this summer.
In its latest electricity trends report, the Australia Energy Market Commission (AEMC) predicts prices across the country will rise sharply in the first quarter of 2018 before falling by 6.2 per cent each year on average over the next two years from July thanks to falling wholesale energy costs.
A record-breaking high in the March 2018 summer quarter is forecast to be the peak for energy bills. Photo: MICK TSIKAS
“Consumers are riding a power-price rollercoaster driven by changes in generation,” the AEMC said.
Victoria is expected to see the greatest change in its electricity bills, with power prices falling 8.2 per cent between July 2018 and 2020.
But average annual bills in Victoria this financial year are tipped to be 15.9 per cent higher, driven by the wholesale electricity price, the state’s first summer without the Hazelwood coal-fired power plant, and a higher gas price, which increased the cost of operating gas-fired generators.
Annual electricity bills will peak this current financial year at around $1275 for an average residential user. By the 2019-20 financial year, bills will drop to an average of $1075.
South Australia and Queensland will see a similar drop in price of 7.3 and 7.1 per cent respectively from the middle of next year.
This will be welcome news for South Australians, who have some of the highest energy bills in the world, and are seeing a 17 per cent increase in annual average electricity costs, which will peak this financial year at nearly $1900.
NSW and Tasmania are expected to have the smallest reduction in future prices, with declines of 6.6 and 6.5 per cent respectively from the middle of next year.
But annual electricity bills in NSW are forecast to be 10.2 per cent higher for the current 2017-18 period compared to last year, reaching close to an annual total of $1300 for an average residential user. They are expected to fall to an average annual rate of $1125 for the 2019-20 financial year.
Western Australia, the Northern Territory, and the ACT will all continue to see price increases, with WA forecast to experience a 6.5 per cent jump in current energy bills.
Despite these forecast prices falls, the AEMC said the government must continue to refine its energy policies to ensure these price reductions occurred.
“Right now we’re seeing the whole power system transforming, so it’s going to be cleaner, with more new technologies like batteries, but we have to make sure this market transformation works,” the AEMC said.
It forecast that around 5.3 gigawatts of new power would come online between 2016-17 and 2019-20, the majority of which – about 4.9 gigawatts – would be renewable generation, which would help drive down energy costs in the medium-term.
“We know more wind and solar supply will help bring prices down, but old power stations are starting to close down, which means supply will drop and prices go up again,” an AEMC spokeswoman said.
“Without investment in replacement dispatchable capacity, wholesale prices will go up again and remain volatile. And the rollercoaster will be repeated. If it’s not managed the right way you can get more system instability and blackouts.”