AEMC releases electricity prices trend report

Electricity prices will jump this year, according to a new report by the Australian Energy Market Commission.

The Electricity Price Trends Report found that by June 30, prices are projected to rise 14 per cent, with the network component of electricity prices consistently driving up the invoices.

After the 14 per cent increase, it has been forecast that there will be a three per cent rise per year, for the next two years to June 2015.

AEMC chairman John Pierce explained that electricity prices may decrease as a result of improving investment, which will drive down network costs.

He said: "If current trends continue, overall wholesale prices are expected to remain flat, and we expect retail costs to flatten as well.

"The price impact of environmental initiatives is also moderating. The carbon price has already been factored into wholesale energy costs, and the impact of various state and commonwealth environmental schemes is likely to slow from this year."

Mr Pierce added that this reflects that the solar credits multiplier will end under the small-scale Renewable Energy Scheme as of January 1 2013, with higher feed-in tariffs closing to many participants in various states.

The report has identified which factors are impacting the rise in electricity prices, and how each state will be affected.

This is a forecast of pricing trends, but not actual prices, and looks at what drives trends. Mr Pierce warned that the report does not take into consideration recent government and decisions by regulators.

Jurisdictional regulators are setting prices based on different issues in each state, with population spread and density, customer consumption levels, weather, economic strengths, technology and environmental schemes. Mr Pierce explained that network price impacts vary across states and territories, despite accounting for the bulk of total increases.

"There are wide variations across the different states and territories but, on current trends, prices rise by an average 3.7 c/kWh [cents per kilowatt hour] this financial year, with that growth falling to less than 1 c/kWh on average for 2014 and 2015," he said.

Given the clear indication that there are some factors which are driving up electricity prices, Mr Pierce explained that final pricing will be impacted as a result of changes taken by jurisdictional regulators.

Posted by Charlie Moore