Formal announcements of big jumps in household energy bills, deliberately delayed until after the May 21 federal election, have begun, with a 5% increase in prices revealed for Victorian households.
The rise in prices, which is expected to be replicated by other states, follows a sharp jump in wholesale prices, caused by a powerful combination of rising coal and gas prices, coal disruptions and the power of pricing due to lack of competition in the market.
The leap is already starting to take its toll on small energy retailers, with some, such as Pooled Energy, being forced to appoint managers and close stores, and others, such as LP Energy, in fact asking customers to move elsewhere. to relieve the pressure on your balance sheet. .
Wholesale prices take a while to flow into retail bills, and the Australian Energy Regulator, as RenewEconomy pointed out last week, was expected to publish its new guide on May 1, but he postponed it until after the election so that he could “do more research.” . ”
This announcement is now expected at any time starting tomorrow, but in the meantime, the Victoria Essential Services Commission has revealed that the annual bill for a typical residential customer in this state will increase by about 5 percent.
Invoices are expected to rise from the $ 1,342 set in Victoria’s default bid as of January 1, 2022 to $ 1,403 for the 2022-23 fiscal year, or an average of $ 61.
“The main reason for the increase is a projected increase in wholesale electricity costs, which reflects recent changes in market conditions and rising energy prices,” CES said.
“For residential customers, the benchmark for the cost of wholesale electricity has risen by about 12%, accounting for almost two-thirds of the increase in Victoria’s default supply.” .
And more than that, both in terms of projected retail price increases and the justifications given for it, the Australian energy regulator is expected on Thursday, when it announces the direct market offer for the period 2022 -23.
In its own statement accompanying the VDO on Monday, the ESC said it had also delayed the submission of its market estimates of contract prices for that determination period, until May 6, 2022.
In the case of ESC, the Commission said the delay was due to “the importance of the wholesale costs of Victoria’s default supply and the recent sharp changes in electricity market prices. “.
But for whatever reason, the timing seems terribly convenient for the ousted Morrison government and its energy minister, Angus Taylor.
Taylor, who has called for credit for reductions in electricity prices through renewable energy sources, while lamenting that there was too much wind and solar in the grid, repeatedly said during the election campaign that electricity prices they would double under a Labor government.
And you wouldn’t know, they are heading down this path, albeit for none of the reasons Taylor claimed (claims that were quickly and thoroughly refuted).
So far this year, wholesale prices in the domestic electricity market are on average 50% higher than last year in Victoria, South Australia and Tasmania, 80% higher in NSW and 150% more in Queensland.
These rising spot prices are said to be driven by a combination of factors, such as global geopolitical turmoil, a series of unfortunate failures by local coal-fired power plants and a national electricity market that, thanks to a lack of clear policy since from the top in the long run, it’s far behind where it should be on the road to renewables.
“The market is completely broken; I’ve never seen anything like it in my 20 years of trading,” a longtime industry informant told RenewEconomy last week. “We will lose jobs, we will lose industry … It is absolute madness.”
And a good mess for a new government, which, as analyst Tristan Edis pointed out last week, would inevitably be to blame.
“If Labor is elected on Saturday, I can blame them for the rising energy prices that are already developing in the wholesale market, but which will only affect residential retail prices in a few months,” he said. write last week.
“The real causes will be ignored: rising coal and gas prices and coal breakdowns.”
Tim Nelson, a former AGL economist and now head of markets at Iberdrola Renewables, said in a tweet on Tuesday that prices in NSW, which average 300 / MWh in May, are likely to end the quarter at twice the level of the previous quarter.
“Right now (1 week before winter), there is (approximately) 4 GW of coal in NSW and VIC alone,” Nelson tweeted. “And people keep talking about capacity markets – a payment plant that’s not available!”
AEMO, meanwhile, has withdrawn its Pooled Energy license, which had been backed by a $ 2.5 million grant from ARENA to pursue efficiency and demand management in the yard’s pools.
The Australian energy regulator is expected to invoke its “last resort” mechanism – for the first time in more than three years – so that Pooled Energy’s customers can be distributed to other retailers.