Australian Energy Market Commission says prices will begin to fall next year and by 2022 will be $97 a year lower

This article is more than 9 months old

This article is more than 9 months old

The price of residential electricity is estimated to start falling next year and continue to fall until 2022, the Australian Energy Market Commission says.

The AEMC’s annual report on electricity price trends shows an overall falling price outlook over the next few years, mostly due to decreases in the wholesale cost from increased generation capacity, particularly from windfarms.

By the end of 2022, almost all Australians are expected to spend an average $97 less on their annual power bills after prices start falling in 2020, the Australian Energy Market Commission says.

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Annual bills during the financial year 2018-19 reached $1,370 and have been calculated to fall to $1,273 by June 2022.

This drop is not expected for Western Australia, where annual bills are estimated to be $100 more expensive.

This general decrease will only happen after a financial year 2019-20 that will see peak prices in all states but Queensland.

The Northern Territory was not included in the report as the NT only recently opened to independent generators and their bilateral contracts with retailers were made in commercial confidence.

“While the overall national trend is down all across the supply chain there are regional differences across states and territories that will affect price outcomes,” said the AEMC’s chairman, John Pierce.

“Overall, a representative consumer will pay around $97 less than today by June 2022.”

This drop in prices will be seen more clearly in south-east Queensland, where annual residential bills are expected to be $278 less in 2022 than they were in July 2019.

The AEMC report looks at the combined price of electricity generation, transmission and distribution as well as government policy schemes to estimate the cost of the total kilowatt consumption in a year.

Wholesale costs are the main driver of this decrease because of significant increases in generation capacity, particularly windfarms, the report says.

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“These results for FY19 to FY22 point to the state of the market over this specific period, which will see significant injection of around 5,000MW of new supply,” Mr Pierce said.

Another main player in the fall in prices will be the environmental cost, estimated to fall by an annual average of almost a 9%.

The report points out that subsidies including the 20% renewable energy target winding down are the reasons for this decrease in green scheme costs.

Data estimates from the AEMC also shows 6pm to 8pm is still the most expensive time to use electricity in New South Wales, Queensland, Victoria and South Australia.

As “no two households use energy in the same way”, AEMC encourages users to shop around to get the best deal for their circumstances through government comparison sites.