Why is electricity so expensive in Australia?
We’ve got a number of the world’s largest coal and gas reserves, yet Australia has the sixth-most-expensive energy within the world.
Furthermore, consistent with the Australian Competition and Consumer Commission (ACCC), we are paying 44% more for electricity than we did ten years ago. Ouch.
Something just doesn’t add up.
Why are Australians paying top dollar for electricity?
With electricity retailers, politicians and renewable energy advocates all pointing the finger in several directions, the solution has become more complicated than it should be.
Breaking it down, there are four major factors contributing to a rise in our energy bill: wholesale costs, network charges, retail margin, and environmental costs.
The wholesale costs include the expenses related to generating electricity. These expenses have increased dramatically over the past few years thanks to a snowball of reasons leading up to our present day energy crisis.
The instability and closure of huge power stations has put strain on the whole electricity network. When the National Electricity Market (NEM) was established in Australia in 1998, there was more generation capacity than demand. The oversupply of energy made prices relatively cheap, however this put financial pressure on fuel producers.
Power stations were forced to supply less electricity at lower prices leading to the closure of several large power coal plants across the state .
Now we are faced with an under-supply, not to mention the state of the remaining power stations are not fit for the 21st century.
According to the new Climate Council report, End of the Line: Coal in Australia, there have been almost 100 breakdowns at fuel power stations over a seven-month period ending in June 2018.
Furthermore, by 2020, over half of the coal power stations in Australia will be over 30 years old. It comes as no surprise the older they get, the more unreliable and expensive to operate.
Unfortunately, Australia has did not build enough new generation to replenish the retirement of the present coal plants.
Another large expense contributing to our energy bill is that the costs of poles and wires to supply a reliable delivery of energy.
Australia may be a large country, and thus has one among the longest (and most pricey) electricity networks within the world. Keeping poles and wires well maintained to maneuver electricity round the nation is extremely expensive, and may structure half our power bills.
The third contributor is the retail margin. This covers the prices of the electricity companies’ administration, marketing and other services.
Numerous studies have pointed the finger at retail margins for becoming one among the most important causes for current price rises. In fact, a 2017 study on electricity prices conducted by the Australian Competition and Consumer Commission discovered the prices related to electricity companies accounted for 1 / 4 of the average residential energy bill.
Finally, the govt green schemes have added an additional burn to our energy bills over the past decade with the Renewable Energy Target scheme (RET), household solar array grants and other energy-efficient incentives for households and businesses.
While it’s imperative to reduce greenhouse emissions, the schemes have lacked unity and support from the governments resulting in questionable results.
It appears there has been no plan for Australia as a whole; with state and territory governments sharing the responsibility of their energy supply alongside the Australian Government.
We’ve seen state governments introduce and scrap multiple failed schemes while the Australian Government has rejected policies without even trying them.
So here we are. An under-supply of energy, an aging industry, and no effective policies put in situ to assist things .
So, who is responsible for the rising energy prices in Australia?
Basically everyone.
Yes, that includes us – the customers.
As the Australian Competition and Consumer Commission’s (ACCC) reported within the 2018 Retail Electricity Pricing Inquiry, customers became confused, disengaged and too lazy to buy around.
The electricity market in Australia has become very tiring to know , however a replacement rule implemented to electricity and gas retailers, which started in February this year may change our relationship with our energy bill.
The new rule ensures electricity companies must inform customers of a price change a minimum of five days prior.
It may be an easy change, yet the goal is to enhance the transparency between retailers and customers so we will better understand our energy bills.
While there are many factors behind Australia’s costly energy bills, the great news is we will do something about it.
Shop around and find the most competitive energy plans in your area. You may be surprised just what proportion you'll save by switching your electricity retailer.
Furthermore, consistent with the Australian Competition and Consumer Commission (ACCC), we are paying 44% more for electricity than we did ten years ago. Ouch.
Something just doesn’t add up.
Why are Australians paying top dollar for electricity?
With electricity retailers, politicians and renewable energy advocates all pointing the finger in several directions, the solution has become more complicated than it should be.
Breaking it down, there are four major factors contributing to a rise in our energy bill: wholesale costs, network charges, retail margin, and environmental costs.
The wholesale costs include the expenses related to generating electricity. These expenses have increased dramatically over the past few years thanks to a snowball of reasons leading up to our present day energy crisis.
The instability and closure of huge power stations has put strain on the whole electricity network. When the National Electricity Market (NEM) was established in Australia in 1998, there was more generation capacity than demand. The oversupply of energy made prices relatively cheap, however this put financial pressure on fuel producers.
Power stations were forced to supply less electricity at lower prices leading to the closure of several large power coal plants across the state .
Now we are faced with an under-supply, not to mention the state of the remaining power stations are not fit for the 21st century.
According to the new Climate Council report, End of the Line: Coal in Australia, there have been almost 100 breakdowns at fuel power stations over a seven-month period ending in June 2018.
Furthermore, by 2020, over half of the coal power stations in Australia will be over 30 years old. It comes as no surprise the older they get, the more unreliable and expensive to operate.
Unfortunately, Australia has did not build enough new generation to replenish the retirement of the present coal plants.
Another large expense contributing to our energy bill is that the costs of poles and wires to supply a reliable delivery of energy.
Australia may be a large country, and thus has one among the longest (and most pricey) electricity networks within the world. Keeping poles and wires well maintained to maneuver electricity round the nation is extremely expensive, and may structure half our power bills.
The third contributor is the retail margin. This covers the prices of the electricity companies’ administration, marketing and other services.
Numerous studies have pointed the finger at retail margins for becoming one among the most important causes for current price rises. In fact, a 2017 study on electricity prices conducted by the Australian Competition and Consumer Commission discovered the prices related to electricity companies accounted for 1 / 4 of the average residential energy bill.
Finally, the govt green schemes have added an additional burn to our energy bills over the past decade with the Renewable Energy Target scheme (RET), household solar array grants and other energy-efficient incentives for households and businesses.
While it’s imperative to reduce greenhouse emissions, the schemes have lacked unity and support from the governments resulting in questionable results.
It appears there has been no plan for Australia as a whole; with state and territory governments sharing the responsibility of their energy supply alongside the Australian Government.
We’ve seen state governments introduce and scrap multiple failed schemes while the Australian Government has rejected policies without even trying them.
So here we are. An under-supply of energy, an aging industry, and no effective policies put in situ to assist things .
So, who is responsible for the rising energy prices in Australia?
Basically everyone.
Yes, that includes us – the customers.
As the Australian Competition and Consumer Commission’s (ACCC) reported within the 2018 Retail Electricity Pricing Inquiry, customers became confused, disengaged and too lazy to buy around.
The electricity market in Australia has become very tiring to know , however a replacement rule implemented to electricity and gas retailers, which started in February this year may change our relationship with our energy bill.
The new rule ensures electricity companies must inform customers of a price change a minimum of five days prior.
It may be an easy change, yet the goal is to enhance the transparency between retailers and customers so we will better understand our energy bills.
While there are many factors behind Australia’s costly energy bills, the great news is we will do something about it.
Shop around and find the most competitive energy plans in your area. You may be surprised just what proportion you'll save by switching your electricity retailer.