Electricity Prices Drop As COVID-19 Spikes Residential Demand, Says ACCC
Electricity prices paid by residential and small business customers in most Australian states dropped significantly between 2018 and 2019, according to a new report by the ACCC.
The consumer watchdog analysed the bills of over 1.5 million users of 11 different electricity providers in NSW, SA, south-east Queensland and Victoria and found the median price paid by customers fell by 4.4% for residential usage and 7.5% for small business usage.
“While it is still early days, the analysis of this large unique dataset indicates that electricity pricing and advertising reforms introduced in July last year have been effective in protecting customers on standing offers from excessive pricing and bringing down electricity bills,” ACCC Chair Rod Sims said.
The cost of wholesale spot market electricity has also been falling since Q1 2019, largely due to lower fuel costs for generators and increased renewable generation.
“The drop in wholesale prices is excellent news for consumers, especially at a time of rising household bills. While wholesale price falls have been partially offset by higher network costs (except in South Australia where network costs fell), retailers are legally required to pass on any sustained savings to consumers,” Sims added.
Year-on-year percentage change in total consumption in Victoria
Under electricity retail pricing and advertising reforms introduced in July 2019, retailers across New South Wales, South Australia, South East Queensland and Victoria are required to show how their offers compare to the Default Market Offer or Victorian Default Offer prices set by the regulator.
This enables customers to easily compare offers across the market.
The ACCC also analysed electricity consumption during Q2 2020, during the height of the COVID-19 pandemic.
It found overall, consumption fell by 2% compared to the sae time last year. However, residential consumption rose significantly while business consumption plummeted.
Specifically, Melbourne residential electricity consumption rose by between 10 and 30 per cent in April and May 2020, depending on the weather, compared to the same period in 2019.
The report also found solar customers paid 24% lower effective prices for electricity from the grid than non-solar customers in 2019, largely because of solar rebates. While solar residential customers tended to use slightly more electricity from the grid, their median bill was $313 pa lower than the bill of non-solar consumers.
More information from the ACCC report can be found here.