Why have Australian electricity prices risen so much?

Why have Australian electricity prices risen so much during the last few years? One reason is the federal Liberal/National coalition hatred of renewable energy and love of coal/gas.

Interestingly the only group of Australians that haven’t experienced huge increases in electricity prices recently is residents of the ACT.

That’s because several years ago their Labor/Greens coalition government sensibly bought lots of renewable electricity with long term contracts.

The quoted text in italics below is a more in-depth explanation of high electricity prices by the founder of Energy Locals, one of the few Australian electricity retailers who really support renewable energy and don’t own any fossil fuel electricity generation. I’ve also added some Twitter posts that add context.

“Speaking frankly, Australia has meandered along without a coherent national energy policy for too long. It’s not surprising that coal power stations are breaking down: the owners of them had little incentive to keep upgrading them”.

“However, rising coal and gas prices – which feed into higher wholesale electricity prices given they’re still used for the majority of generation – could and should have been avoided”.

“The government eventually announced price caps, but they’ve not been sufficient to avoid nasty price increases this year”.

“Companies that have access to heaps of coal and gas but still opportunistically pass though significant customer price increases while also announcing increased profit outlooks (yes, we’re talking about you Origin and AGL) should be ashamed of themselves”.

“There’s a lot that goes on behind the scenes when it comes to electricity. As energy retailers, we deal with various unavoidable costs to ensure that your lights stay on every day”.

“Every July, the energy regulator bigwigs conduct a thorough review of the key costs that make up the energy supply chain. Based on their review, the standing offer for energy is adjusted”.

“The impact of these changes on your bill depends on factors like your usage, network region, and whether you have solar panels”.

“Let’s talk about the main factors that contribute to changes in energy prices”.

“Distribution and wholesale costs make up the majority of an average electricity bill”.

“Distribution & network: We pay local network service providers to keep the power flowing through the poles and wires in your area. The costs vary depending on where you live and the number of upgrades that are needed. This year, these costs have mostly increased due to higher inflation”.

“Wholesale energy: This is the electricity we buy from generators to supply your property. It makes up the biggest chunk of your energy costs”.

“Unfortunately, Australia has an overreliance on fossil fuels like coal and gas, and their costs have skyrocketed compared to previous years. On top of that, Australia has also had some reliability issues with old coal-fired power plants. As a result, the price we can buy power for has almost doubled since the start of 2022”.

“Other things that we believe will help include”:

“A domestic gas reservation policy. It’s crazy to see gas exported at high international prices when there’s not enough affordable gas for customers who live in the country that it’s coming from”.

“A capacity market, meaning power stations are paid to have generation available when required”.

“The introduction of this should be coupled with a reduction in the current maximum price that wholesale power can reach” [EDITOR: this is over $15,000/kWh, no that’s not a typo].


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