Electricity prices are falling. So why are Canberrans’ household power bills about to rise?

 In Home News Section, Uncategorized

Canberra households will be paying more for electricity from July — about $5 a week more.

The sole company that runs the ACT’s power network, EvoEnergy, has today requested the increase from the network regulator, which will almost certainly approve it.

EvoEnergy says its charges need to go up because electricity prices are going down.

If that sounds confusing to you, you’re not alone — the workings of Australia’s electricity markets are complicated.

Let’s go through what has happened and explain why.

The renewable energy capital

Canberra’s entire electricity use is bought from renewable suppliers, such as wind, solar and hydro-power stations.

To ensure this, the ACT government has contracts with generators across the country, including the massive Hornsdale Wind Farm in South Australia.

However, to lock in that supply and to help fund the construction of those generators, the government needed to offer them an attractive, fixed price for their electricity.

Energy Minister Shane Rattenbury says those contract prices were always expected to be slightly above the market price — a difference of about $5.50 a week per household.

This is the expected, direct cost to Canberrans of living in a city with 100 per cent renewable electricity.

Canberrans won some, now they’re losing some

For the past few years, however, ACT households have not been paying more — the ACT’s price regulator says Canberrans have actually been paying “among the lowest prices in Australia”.

How did that happen? The ebbs and flows of the market moved in Canberrans’ favour.

The wholesale price of electricity (how much power stations get for selling it) went above the prices in the ACT’s supply contracts, which meant Canberrans were getting a great deal.

Now, the market price is falling below the ACT’s negotiated prices, which means the ACT must pay extra to fulfil its contracts.

And that’s the main reason Canberrans’ bills will increase — EvoEnergy says it expects its payments to renewable suppliers to more than triple from $42 million this financial year to $127 million next year.

There are other, smaller factors too, like increased costs of running the network (maintaining the wires and equipment).

There are also differences between the market prices in South Australia (where a lot of the ACT’s contracted supply comes from) and New South Wales (where the ACT’s actual electricity comes from). Those differences are currently disadvantaging Canberra consumers.

How can Canberrans cut their energy bills?

The typical Canberra household pays about $1,967 a year for electricity, but there are several ways to cut these costs.

The most obvious is to use less electricity, or at least use less during the evening peak, when prices are highest.

ACT households are among the heaviest users of electricity in Australia — the typical household uses almost twice that of a Victorian household, for example — largely because of poor housing design and Canberra’s climate.

So any improvements in energy efficiency are likely to have especially high pay-offs for Canberrans.

The other option is to shop around. The Australian Energy Market Commission says the typical ACT household can cut their electricity bill by $269 a year by switching to the lowest-cost energy retailer.

That saving is worth almost exactly the same as EvoEnergy’s predicted price rise for the coming year.

So, with a bit of effort, Canberrans might not need to fork out any extra money at all.

(Original ABC Article)