Comparing Australia's electricity costs to the rest of the world
The rising cost of energy is something that's been in the headlines for many years now. Households and businesses alike are facing increasing electricity prices, which in turn is leaving them with less disposable income.
Although it may seem like Australia is suffering, how does the country compare to its international counterparts? Are businesses really paying too much for their energy, or are they actually facing some of the lowest prices in the world?
Australia's prices run away from the pack
UnitingCare Australia recently carried out a report, which suggested that the country is paying considerably more for its electricity than other parts of the world. With help from independent consultants at Carbon and Energy Markets, it found that the amount paid in electricity network costs also varies depending on where in the country the business is located.
Queensland was singled out as one part of the country where users are facing "extraordinarily high network costs", noted National Director of UnitingCare Australia Lin Hatfield Dodds.
"The highest charges in Australia are four times more than the lowest charges, and double the highest price charged in Great Britain," she commented.
The report found that rising energy costs are a major source of financial distress for Australian households, so it stands to reason that companies must largely be the same. One of the biggest challenges at the moment is deciding whether to lower costs and jeopardise reliability, or whether to give networks the level of investment they require.
There's no debate that electricity costs are increasing for Australian companies. In June last year, the Australian Bureau of Statistics (ABS) revealed that despite households using 4 per cent less electricity than they did four years ago, the value of the energy they receive is nevertheless 43 per cent higher.
"Put simply, nationally we are using less coal to produce electricity but it is costing more to use," noted Peter Williams from the ABS.
Other nations feel the pinch
While Australia's energy prices are increasing, this is a situation that's also faced by many other nations. In fact, it's highly likely that this is a trend facing every developed nation on the planet.
For example, the UK's Department of Energy and Climate Change found that during the year to the third quarter of 2014, the price paid for domestic fuels increased 2.4 per cent. Gas finished the year 2.9 per cent more expensive than it started, while electricity prices marked a rise of 3.3 per cent.
Wholesale gas prices in the UK have been increasing since the turn of the Millennium, which is largely the result of price constraints within Europe. Electricity also hasn't been immune from this trend.
Businesses in the US are likely to be seeing a similar trend. Forecasts from the US Energy Information Administration (EIA) suggest that electricity prices are rising - and are going to continue this trend at least for the foreseeable future.
In 2013, commercial electricity users were paying an average of 10.29 US cents per kilowatt hour for their electricity. This increased to 10.74 cents the following year. By 2016, US businesses could find this cost has risen to at least 10.92 cents.
The rising cost of electricity has also been of great concern to China recently, even though it became the world's biggest producer of electricity back in 2011. The EIA explains that a decline in coal prices in 2012 helped bring down costs for power producers, but this is nevertheless an area that is being kept a close eye on.
Posted by Jeremy Elliott