Australian households are expected to save $230 on their electricity bills in the next financial year due to wholesale price falls recorded after Labor’s market intervention.
According to Treasury analysis of ASX data in December, wholesale electricity prices for 2023 fell by 44% in Queensland compared with November.
Prices fell by 38% in New South Wales, 32% in South Australia and 29% in Victoria.
This followed the Albanese government’s $1.5bn energy price relief package, which temporarily capped gas prices at $12 per gigajoule and coal prices at $125 per tonne.
The government believes it will take time for price caps to flow through to retail prices, which can be kept high by supply locked in before the caps were in place.
But the futures market shows wholesale prices will be significantly lower than previously forecast, with electricity retailers purchasing supply at prices 30-40% lower than what was available in November before the intervention.
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Wholesale prices for 2023 fell from $213 a megawatt hour in November to $133 in December in NSW, $220 to $124 in Queensland, $135 to $95 in Victoria and $202 to $137 in South Australia.
Labor came to office in May as Australians were being slugged with price rises driven, in part, by Russia’s invasion of Ukraine. The announcement of price rises of up to 20% was delayed by the Coalition in their last month in office.
On Friday, the opposition leader, Peter Dutton, told 5AA Radio that Labor promised on 97 occasions before the election that it would “reduce power prices by $275”, a reference to Labor’s renewable energy policy which was estimated to achieve that reduction by 2025.
Dutton accused the government’s policy of “taking gas out of the system at a time when we need to increase supply”, predicting that this would drive prices up, notwithstanding the cap.
“They’ve imposed this crazy system, this sort of Frankenstein system of price caps and market interference, but on producers, not retailers.”
The treasurer, Jim Chalmers, said that the forecasts released by his office “show our plan is starting to make a difference, which makes it even more disappointing that Peter Dutton tried to block it”.
“The price rises that were forecast were untenable and that’s why we acted,” he said.
“Our intervention will help take some of the sting out of power prices for families and businesses.
“Our package is responsible and reasonable, timely and targeted.
“This isn’t an overnight fix, it’s going to take some time, but it’s heartening to see the plan is already starting to work.”
Chalmers said the price improvements should flow through to consumers, warning the Australian Competition and Consumer Commission “will be watching this closely”.
The energy minister, Chris Bowen, said that the illegal invasion of Ukraine had “caused 90% of global electricity price rises last year”.
“This targeted short-term response was necessary, but so is the long-term plan to increase the uptake of affordable, firmed renewable energy, to reduce our reliance on volatile overseas markets and power Australia’s future as a renewable energy superpower.”
Labor’s energy package has come under fire for plans to pay up to $1bn in compensation to coal power plants in Queensland and New South Wales to reimburse them for actual costs exceeding the $125 price cap.