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Market Insight residential electricity price series

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Methodology

  1. For NSW, SA, QLD and VIC prices and bills are based on the weighted median Market and Standing offers made by AGL Energy, Energy Australia and Origin Energy in each market.
  2. Weighting takes account of:
  • number of customers supplied by each retailer on Standing and Market offers based on publicly available customer number data;
  • number of customers in each network service provider area (in NSW and VIC) based on publicly available data.
  1. It is assumed that half of each retailers’ customers that are on Market Offers receive all conditional and unconditional discounts and the other half of each retailers’ customers that are on Market Offers receive only unconditional discounts.
  2. The median offer in each offer category (Standing Offer, Market Offer with and without conditional discounts) is used in the weighting.
  3. Prices in WA, ACT, NT and TAS are for “Home Plan”, “Home”, “Standard meter”, “Tariff 31” respectively.
  4. For the sake of consistent inter-state comparison, the representative customer is assumed to consume 4,800 kWh per year. It is assumed that the customer has neither controlled load nor solar PV.
  5. All NSW, VIC, SA and QLD retailer offer data is obtained from MarkIntell by scraping retailers’ websites and by scraping Energy Made Easy and Switchon price comparison websites.
  6. Prices include GST.

Residential Annual Electricity Bill

 

Residential Electricity Price

 

   

Pocket
  • Mike Dill

    At 47cents per kWh, how long does it take to pay off a solar array in SA?

    • Andy Bowe

      It would depend on size of array, your household consumption etc. Have a read of a few articles on http://www.solarquotes.com.au/blog/ where he sets out costs etc. I think if done properly most systems payback in 5-6 years, but rebates are increasing for each state re exported power to grid ie SA- AGL offering 16cp kWh exported as of 1/7/17.

      • PLDD

        It should be far faster than 5-6 years. I am in NSW and my 8.4KW system (PV only) is targeted to payback in 5-6 years at a $0.25/KWh tariff and $0.11 FIT.

        Given IPART has recommended a reduction in FIT to $0.08 from July it may take a bit longer. I also thought Victoria was adjusting their FIT to a time of day basis which is more reflective of wholesale price fluctuation (i.e. the FIT rises after 4:00pm – i think). Would be surprised if SA stayed as high given wholesale prices there are also dropping.

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        • Phil NSW

          The increase in the FIT last July was potentially a strategic move to push out the economics of buying batteries. The coal interests don’t want batteries installed as it would eat into their prime payment period. IPART may recommend a reduction but the entrenched gentailers will look after themselves first.

          • PLDD

            I don’t think the FIT makes much difference to the business case for batteries. The key is how much power consumption do you need to time shift and the differential between the FIT and unit cost of power.

            When the FIT in NSW went to $0.11 the unit cost rose as well so the differential didn’t change that much.

            The real problem is battery costs and installation costs are not falling that much – that is what destroys the business case.

            Why would a retailer see a benefit in reducing the FIT – looking after themselves would see them reduce it further…?

          • Phil NSW

            Think about if you were a gentailer. Your best earning opportunity is when solar slows down in the afternoon through to say 8pm. If you could slow the uptake of batteries, this period remains protected for you to cream the system. You know your coal asset is going to be replaced by RE in the future but you want to squeeze out as much from the asset whilst you can.
            Solar installations are steaming ahead with larger and larger installations to the point, it is now quite easy to offset the service fee with your excess power given a higher FIT. Why buy a battery just buy more panels?
            If the FIT goes down it is harder to offset nighttime consumption and the service fee, hence the case for batteries improves.
            The gentailers know their coal assets will expire so they need more generation into the grid which is coming via individuals and businesses installing solar and or wind at zero capital cost to the government and the gentailers. Right now they must be laughing at us because maintaining the required spin capacity isn’t their problem anymore we are taking up the slack as they have large coal fired power stations drop off the grid without replacing the capacity themselves. Five have been closed in recent times and surprise, surprise the network remains viable albeit just viable.

  • Goldie444

    I have come a bit late to this story. It has a lot of questions to help answer our (Australia’s) sorry retail market.
    And how did we get to this stage: Quote “It seems that a reason for the difference between the prices in our monthly series and the AEMC’s annual price trends is that the AEMC assumes all households on market offers pay their retailers’ cheapest rate.”
    If AEMC gets its estimates for market offers in its annual retail price report wrong, what else does it get wrong?

  • Rod

    So much for lower energy costs post the big bad carbon tax. Thanks Tones.

  • Pete

    The Australian newspaper loves the use of point 6. It allows them to keep beating up SA by illustrating an extreme difference that doesn’t necessarily represent reality. For a graph to be called ‘Residential Annual Electricity Bill’ it should also reflect average consumption by state. Energy consumption varies between states, influenced by climate and pricing structures. Climate also influences the wholesale price, for example through the large but infrequent peaks on the SA network on hot days, but it doesn’t have the cold of Vic and Tas which requires overall higher consumption. It’s an easy correction to make and I believe for an author of BM’s standing it should be a bare minimum to represent the annual electricity bill costs more accurately.

    • Rod

      Agreed, I’ve seen the figures somewhere but from memory Tasmanians average nearly double the usage of South Australians.
      Off peak for hot water is also pretty common in SA.
      And in the cents per kWh graph the 48c seems high to me.
      I’m on AGL’s standing offer and 38c less pay on time discount 12%, plus GST so 36.7c kWh.

    • bruce mountain

      Hi Pete, thanks for the post. Yes I agree that different volume assumptions give you a different picture of the typical bill. But my purpose here is to provide an index calculated using a consistent and plausible methodology, and which allows one to track how prices change over time, assuming constant volume. This is an accepted methodology in price comparison and you will find it adopted frequently by official statistical comparisons nationally and internationally. In addition, I would like to draw attention not just to volume differences across the population of consumers, but to price differences in the offers they are on. These two mean the prices for individual customers can be quite different to the index. But this does not undermine the value of an index in tracking changes over time. With respect to the fact that some commentators with a barrow to push will use information to suit their ends. This is inevitable. It is right that you should point out the flaws in their arguments.

      • Pete

        Thanks for your response Bruce. I believe that the assumption of constant volume can be applied on a per state basis. Using the ACCC retail pricing inquiry report, Table 1.1, and what I can read from your graph on the unit price, the ACTUAL average bill price is on par in NSW, SA, QLD and TAS (within $100, mean $2822). That is a very different national bill scenario to that you have presented. That matters hugely in the world of politics that you influence. I have assumed [email protected]; [email protected]; [email protected]; [email protected]; [email protected]; [email protected]

        • bruce mountain

          Hi Pete. Yes there are price and volume difference issues here. Firstly with respect to price, the ACCC’s report has a different date range and very different methodology to establishing price than the one I have. My indices explains my approach and I benchmarked it against information on median actual bills in a report for the Thwaites Review in Victoria, and so I think it is a plausible estimate for the price the median or typical household is paying. There is nothing in the ACCC’s report that gives me reason to change my approach. I do accept you point however that when one looks at bills rather than prices, it is valuable to convey an accurate picture of the typical bill in each state. However, two comments in response. Firstly the typical consumption in the residential sector is rapidly declining in response to technology change and I am not convinced by the amounts that the AER and AEMC use for this. I think their methodology is flawed and long out of date. Secondly, for the purpose of international price comparison consistent volume assumptions are used. I think I need to stick to that. However I do think your points are good and they should be made when participants and governments cherry pick data to suit their agendas. There is a great deal more to be done on publicly available price and bill indices and I will be doing more on that shortly.

  • Glynn Palmer

    Comparing retailers can be like comparing apples with oranges.

    I recently compared retail offers using my annual import and export profile. I import 3956kw tariff 11; 1726kw tariff 33, and export 2759kw for a 4 adult household with 3kw rooftop PV and a solar hot water system. I get the Qld 44 cent/kw feed in tariff + the retail FIT. My research indicated that Energy Australia gave me the best financial deal with a credit of $372 pa. The second best was Alinta with a credit of $308 pa. and Third QEnergy with a credit of $290pa.

    Then I discovered that Energy Australia hasn’t paid any Australian company tax over a 3 year period on Australian derived revenue of $24b.
    https://www.michaelwest.com.au/tax-dodgers/energyaustralia-holdings-limited/
    In the 2015/16 ATO report on corporate tax paid
    https://data.gov.au/dataset/corporate-transparency/resource/b84c2b8d-c595-4219-987d-fc1add7f00f0
    AGL Energy had revenue of $13b; taxable income of $711m; tax payable of $208m.
    AGL Generation: revenue $733m; taxable income and tax payable $0
    Origin Energy: revenue $12b; taxable income $94m; tax payable $0
    ORIGIN ENERGY URANQUINTY POWER PTY LTD: revenue $111m; taxable income and tax payable $0.
    Energy Australia Holdings: revenue $8b; Taxable income and tax payable $0.

    With the knowledge that Alinta has put in a bid of $250m to acquire the clapped out Liddell coal polluter, I emailed them to ask what proportion of their electricity sent out was sourced from renewable energy.They responded by sending me their usual marketing information which I already had from energy price fact sheets available on the energy made easy site. So I assumed that they are not sourcing renewable energy at the rate that the RET requires.