Power Prices Difficult to Fall as Frydenberg Calls for Price Drop

Energy experts are warning it will be difficult for power to drop in price, despite Federal Government calls for power retailers to cut prices.

Curtin University Energy Policy Researcher James Eggleston said lowering power costs for consumers could be an impossibility, as gas becomes more readily available for households.

“By in large the bulk of your energy charges are actually for the use of the infrastructure,” Mr Eggleston said.

“When you get your energy bill, for instance in Western Australia we pay roughly 26 cents per kilowatt hour. The bulk of that price is actually the cost of the network infrastructure used to deliver that energy to you.”

“It’s very difficult to reduce that cost.”

However, he said WA’s energy context was different to the national energy market with an “isolated network” and renewable energy to “likely bring prices down.”

“The reason for that with renewable energy, you can actually generate your energy much closer to the source of consumption.”

“You don’t need the large network infrastructures that are currently required today to boom energy over large distances.”

He believed there is a “gradual phasing out of coal-fired power”.

“Gas is largely replacing that, but what we are seeing on the horizon is rapid up-take of renewable energy.”

“So in terms of global spending last year $240 billion was spent on distributing renewable generation and that’s likely to grow.”

He said though there were still “a lot of federal policies that govern the Western Australian energy market.”

Mr Eggleston’s comments came as Mr Frydenberg made the case for states, federal Labor and rebel Coalition backbenchers to adopt the proposed National Energy Guarantee.

He claimed measures already taken by the federal government including increasing the supply of gas for domestic use had dropped the wholesale power price by 20 per cent.

“The wholesale component is about a third (of an energy bill),” Mr Frydenberg told the National Press Club in Canberra on Wednesday.

“July is the next period in which energy companies will adjust their prices. I’ve made it very clear to the CEOs that, with that decline in the forward curve for wholesale prices, and what we’ve seen in the gas market as well, we would expect that to be passed on to consumers.”

“I don’t know what the number’s going to…but certainly we are expecting to see power prices come down.”

Despite Mr Frydenberg’s calls, New South Wales’ power prices are expected to rise.

Meanwhile, Synergy said electricity tariffs are set by WA’s state government in accordance with budget measures.

The government claims decisions still need to be made over the state’s electricity costs.

“We are aware that households are under pressure,” Treasurer Ben Wyatt said.

“We want to ensure that any limitations have that balance between a trying to reduce whatever subsidies are paid out of the public purse versus how we can ensure that people are able to pay the costs of power bills.”

However, Opposition Leader Mike Nahan said “we’re not even part of the national energy market” and the state would not be affected.

“We have a totally different operation and I think we have a pretty good mix right now,” Dr Nahan said.

“We do not have the problems of the eastern seaboard on electricity.”

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