Energy consumers have been warned to brace for more energy bill shocks following record-high wholesale energy prices in the June quarter.
A new report from the Australian Energy Market Operator (AEMO) showed the average wholesale spot price in the National Electricity Market was $264 a megawatt hour (MWH) in the three months to June 30.
This represented a $177/MWH jump on the previous quarter, and a $179/MWH rise from the June quarter last year.
The quarterly average NEM spot price of $264 MWh was more than double the previous high of $130/MWh recorded in the first quarter of 2019, and more than triple the second quarter average of $85/MWh this time last year.
The soaring energy prices prompted the market operator to impose price caps for both electricity and gas markets.
AEMO executive general manager – reform delivery Violette Mouchaile said the period of instability proved more investment in renewables and storage was needed urgently.
“Wholesale energy price hikes and volatility were driven by multiple factors, including high international commodity prices, coal-fired-generation outages, elevated levels of gas-fired generation, fuel supply issues, and many east coast cities experiencing their coldest start to June in decades,” Mouchaileh said.
“What’s clear is the urgent need to build out renewable energy with diversified firming generation – like batteries, hydro and gas – and transmission investment to provide homes and businesses with low-cost, reliable energy.”
Bruce Mountain, director of Victoria Energy Policy Centre at Victoria University, told ABC Radio he was concerned energy prices would remain high.
“We haven't ever seen prices reach these levels … they're about two to three times higher than the highest quarterly average that we've ever seen,” he said.
“I'm not sure that this culture is going to stand out as a one-off.”
He said we had never had to deal with such a severe shock to energy markets.
“I think it's a bigger deal than the oil crisis of the 1970s,” Mountain said.
“It's a nightmare for many customers … [who] cannot afford electricity at these prices, and governments will need to bail them out.”
Wholesale electricity prices make up around 30-40 per cent of a customer's energy bill.
A recent survey by iSelect found 61 per cent of Australians surveyed planned to make at least one cutback to help afford their upcoming winter energy bill.
Around 21 per cent said they would forgo food to cover the extra costs by cutting back on grocery expenses.
Around 39 per cent said they would cut back on entertainment and dining out to help pay for their winter energy bill.
iSelect offered a couple of tips to find the best energy deal:
Don’t automatically default to the default - The DMO (or VDO) may not be the best-value option for you. Instead, take the time to compare both default and available market offers.
Don’t set and forget – Retailers are required to notify you when your rate changes or your discount expires. This should prompt you to compare other plans in the market to ensure you’re getting a competitive deal.
Flexible payment options – Pay your bills weekly, fortnightly or monthly, or sign up for bill smoothing, which will divide your annual usage into even monthly instalments, to help avoid bill shock.
Look out for special offers – Some retailers will offer you a better deal if you pay on time, manage your bills online or pay by direct debit. Keep an eye out for these offers but be aware that some may expire after a year or two.
Shop around – While there may be fewer options available in terms of both plans and providers, there are still savings to be found and, in the current environment, every dollar saved counts.