The cost of powering Australia's homes and businesses has plummeted, the consumer watchdog says - and retailers are passing the benefits on to consumers.
A report by the Australian Competition and Consumer Commission found that the cost of supplying electricity to households has fallen to levels not seen in nearly a decade in Australia.
Federal energy minister Angus Taylor pointed out that the ACCC report found the average annual cost of electricity for a residential customer in 2020–21 was $1,434, down by $128 or 8 per cent across the past two financial years. Costs for businesses have fallen even further, down 10 per cent for small businesses over the last two years, and down 12 per cent for large businesses.
The ACCC also said it expected electricity prices would continue to fall over the coming 12 months as the impact from falling wholesale costs over the last two years continue to flow through to consumers.
The ACCC attributed the reduction in prices to cheaper wholesale prices.
The report reviews the cost of supplying of electricity into the National Electricity Market states of New South Wales (including ACT), Victoria, South-East Queensland, South Australia and Tasmania for the last two years.
Commission chair Rod Sims said the report is important as it discloses whether consumers benefit from network savings:
“Our analysis of retailers’ cost data is valuable because it not only shows us what makes up the total figure on an electricity bill, it reveals whether they pass on cost reductions to consumers.”
“More renewable generation and lower fuel costs have brought down the wholesale price of electricity, and the Prohibiting Energy Market Misconduct laws are working because we can see the savings being passed down from generators, to retailers, to consumers.”
Mr Sims noted there was a lag between savings generated at the network end and for consumers at the retail end, however:
“...we know there are more savings still to be passed on to consumers and businesses because we haven’t yet seen the lower prices in the wholesale market for electricity fully reflected in retailers’ costs.”
“Electricity prices are on a downward trend, but we want industry and governments to continue working on this because prices are still much higher than they were just over a decade ago.”
Despite the reductions, inflation-adjusted prices remain 32 per cent higher than 13 years ago in Australia.
Minister for Industry, Energy and Emissions Reduction Angus Taylor said government programs, such as the Default Market Offer and the “big stick” legislation for energy companies, are directly helping customers to benefit from reduced electricity costs.
“Households and businesses rely on affordable, reliable power to grow and thrive. They cannot afford a repeat of the doubling of electricity costs we saw under Labor, driven by the carbon tax and goldplating of our poles and wires.
“This is why the Government’s plan for energy has been about putting customers first, and making sure households and businesses have more money in their hip pockets.