Australian electricity prices predicted to balance out
The Australian Energy Market Commission released their final report titled 'Possible future retail electricity price movements' on March 22 this year.
The report forecasts the future of trends in electricity prices, predicting moderate increases in the coming years.
It is modelled from information and data from jurisdictional governments and regulators, as well as the Australian Energy Regulator.
It was designed to address concerns over the future of retail electricity prices as they rise and impact on overall living costs, and to see if prices are really efficient.
It's predicted that in Queensland, from 2012/13 to 2014/15 electricity prices will rise at an average annual rate of four per cent.
For New South Wales, 2014/15 prices are set to increase at an average annual rate of one per cent.
The Australian Capital Territory will rise by three per cent and Victoria by five per cent. South Australia's increase will be one per cent, Tasmania three per cent, Western Australia two per cent and Northern Territory 16 per cent.
The national average increase amounts to approximately three per cent per year.
The report identified uncertain factors contributing to changes in the electricity industry that may affect estimates, such electricity suppliers and the rate of entry and exit from the generation market.
There have been higher levels of investment in renewable energy generation while a number of coal power plants have shut, altering the spectrum of supply and demand.
If demand is lowered, network prices will rise more quickly.
Come July 1 2013, there will be a series of changes for the cost allowances in regulatory determinations for transmission and distribution network providers.
As each network starts a new regulatory period, revenues or average prices will change over time.
The minister for resources and energy, Martin Ferguson, has welcomed this report and the analysis it provides.
"Importantly, what the report highlights is the peak of network investment is now behind us and power bills are expected to instead move in line with inflation, bringing much needed relief for Australian households and businesses," said Mr Ferguson.
"This is good news for energy consumers, who have faced rising electricity costs in the order of 50 per cent over the past three years – driven overwhelmingly by the need to upgrade and maintain ageing network infrastructure built as long ago as the 1960s."
Mr Ferguson highlights the report's assertion that networks will be the factor driving the electricity price rise, with wholesale and retail costs remaining relatively steady as some green schemes have been downscaled.
Posted by Charlie Moore