On 1 July every year energy retailers in NSW, Queensland, the ACT and South Australia update their customers' prices. 1 July is the chosen date as that's when the network companies are able to change their poles & wires charges each year.
A murky pond
Retailers take a number of factors into account when updating prices: network charges, wholesale energy costs, the price of environmental certificates and - of course - retail costs and margin. This is all bundled into a single percentage that's based on an average customer.
As you may have read about in the press, the specific attribution between these various categories is somewhat murky.
According to the ASX figures, wholesale prices have more than doubled in NSW over the past year, and the data from Queensland charts a similar increase.
What’s causing this? Well, that’s a subject we’ll return to another day. But for now, let’s just say that whether you believe renewable energy is part of the solution or whether wind turbines were delivered to Earth by a distant enemy intent on setting about our demise, the changing energy generation mix is a big part of the issue. We don’t support the belief that this is due to the rise in renewables, but that the tactical withdrawal of significant amounts of traditional generation have driven up prices. More on that another day.
What about me?
In the meantime, back to the most important question: what does this mean for us, the customers at the end of all this?
Invariably, it means that you’ll be paying more for electricity come 1 July. Analysts at Morgan Stanley project that retail prices will have to increase by at least 10 per cent from 1 July, adding between 2c/kWh and 5c/kWh to electricity prices in NSW and Queensland. This alone translates to an extra $120 - $296 per year for the average NSW household and $105 - $258 for Queenslanders. When we factor in substantial network charges of up to $1.50 a day per household, it’s an all-round nightmare for hip pockets.
We’ve locked in an amount of wholesale energy - at lower rates than the current wholesale market - until 1 July 2018. As we don’t earn money from the number of units of energy customers use, we’re offering this to customers so that you can avoid the price increase that your current retailer will whack through in less than three months.
We’re committed to providing Australians with energy that’s cleaner, cheaper and fairer. This is another way we’re proving that, and with the money you save you can celebrate 1 July with a cheese platter and a fine bottle of wine. How does that sound?
Most customers will save money and all customers will be supporting something great.