Electricity prices will continue to fall in the coming years according to the latest report from the Australian Energy Market Commission (AEMC), confirming the Morrison Government’s strong action to bring down electricity prices is having the desired effect.
The AEMC’s 2020 Residential Electricity Price Trends Report forecasts that, on average, residential electricity prices will fall by 8.7 per cent to 2022-23, saving households more than $100 annually.
Reductions are forecast across the entire National Electricity Market (NEM), with a drop of more than $200 expected for households in South Australia.
Falling wholesale costs are the primary driver of the price and bill reductions, with the AEMC predicting that wholesale costs will drop by more than $150 (27.4 per cent) during the period.
With wholesale prices making up around a third of retail energy bills, it is the Government’s strong expectation that those lower prices will be passed on to Australian families and small businesses.
The forecast lower prices come on the heels of ongoing policy action from the Government to lower energy costs and improve outcomes for families and small businesses, which has seen wholesale prices falling for each of the last 15 months, and seven consecutive quarters of year-on-year retail price reductions. These actions include:
- introducing a price cap to protect loyal customers from being ripped off;
- prioritising the delivery of the reliable generation and transmission to keep prices low;
- getting rid of sneaky late payment penalties; and
- passing the ‘big stick’ legislation to hold the energy companies to account and require them to pass on cost reductions to their customers.
Minister for Energy and Emissions Reduction Angus Taylor said lower costs were good for the economy and consumers as Australia emerges from the COVID-19 pandemic.
“Cheaper electricity puts more money in the pockets of hard-working Australians,” Minister Taylor said.
“After what was been a tough year for everyone, news that electricity prices are expected to continue falling in 2021 is a welcome relief.
“The Government is constantly working to help Australians pay less for their energy bills and this report confirms that our actions are having an impact.
“Electricity prices should not hold households and small businesses back, which is why our Government will continue to work hard to keep prices down and the lights on.”
Even though prices are forecast to fall over the next three years, the AEMC predicts a slight increase in prices and bills in 2022-23, which it attributes to the closure of the Liddell power station.
To protect families and businesses against the risk of price rises, the Government has outlined its expectations of the electricity sector to deliver 1,000 megawatts of new dispatchable energy before Liddell closes in 2023.
“The Government is on the side of consumers,” Minister Taylor said. “We are taking strong action to ensure Australians are paying less to keep lights on.”