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ELECTRICITY FUTURE PRICING UPDATE
 

To check electricity future pricing for your state, click below.

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Electricity

ELECTRICITY MARKET UPDATE
 

  • The co-owners of the Callide C coal-fired power station in Central Queensland, have gone into voluntary administration (read more). Amid ongoing uncertainty over the power station - which has been beset by delays following an explosion at its C4 unit in May 2021 (read more).

  • East coast power shortages on the cards without new projects: AEMO: Homes and businesses in every state on Australia’s eastern seaboard are at risk of electricity shortages from 2027 as looming closures of several coal-fired power stations collide with delays in building crucial new gas and clean energy projects to replace them. In a new report to be released on Tuesday, the Australian Energy Market Operator (AEMO) warns “material changes” to its expectations of available power supplies over coming years in Victoria, South Australia, NSW and Queensland have reinforced the urgent need for new generation plants and other key infrastructure to be approved and rolled out. Gaps in the market begin to emerge from 2025, AEMO warns – first in NSW due to Origin Energy’s possible closure of Eraring, then in Victoria from 2026 because of the closure of two gas-fired power stations in South Australia. The forecast gaps will continue to widen until all mainland states connected to the east-coast grid are forecast to breach their “reliability standard” from 2027 onwards. The reliability standard is a requirement for at least 99.998 per cent of forecast customer demand to be met each year. AEMO’s updated reliability forecasts factor in AGL’s decision to bring forward the closure of its 800-megawatt Torrens Island gas-fired power station in South Australia by several years to 2026; a one-year delay to the construction of the Snowy Hydro 2.0 pumped hydro project in NSW to 2026; and a year-long delay to the Kurri Kurri gas-fired power plant in NSW to 2024. Delays to Snowy 2.0 have raised suggestions that Origin Energy may extend the life of Eraring beyond 2025. When it announced its intention last year to close the plant early, the company gave a commitment it would continue evaluating market conditions and not withdraw the plant in 2025 unless the grid was equipped to handle its exit. February 21, 2023 · https://www.smh.com.au/business/companies/east-coast-power-shortages-on-the-cards-without-new-projects-aemo-20230220-p5clwj.html

  • On 9 December 2022, the federal government implemented a temporary (12-month) price cap of $12 per gigajoule for gas and $125 per tonne for coal as part of a package to provide energy price relief in 2023 to east coast Australian households and businesses

  • Coincidentally, wholesale electricity futures prices for 2023, 2024, and 2025 dropped sharply by roughly 20 percent. By the end of December, prices were half of what they were during the peak of the energy crisis in October 2022

  • The federal government immediately pointed to the effectiveness of their price caps on lowering wholesale power prices. However, The Australian Energy Market Operator (AEMO) later noted that prices dropped through November and then again sharply in December ahead of the Albanese government’s intervention due to high renewable energy output. A greater abundance of large-scale solar and wind power meant that low-cost renewable energy dictated price levels more frequently over that period, rather than gas and coal

  • Despite this recent drop, current market prices are still roughly double what they were in December 2021

GAS

GAS MARKET UPDATE

  • In December last year, the federal government implemented an unprecedented price cap of $12 per gigajoule on all east coast wholesale gas sales for 2023 in an effort to reign in skyrocketing energy prices

  • In addition to the price cap, the federal government’s intervention included plans to develop a mandatory code of conduct to force producers to sell gas at “reasonable” prices to local buyers

  • Shortly after this announcement, Shell and Woodside, two of the biggest gas producers on the eastern seaboard, suspended all quoting for new large-scale gas contracts to local retailers or heavy industry as they assessed the legal ramifications of the intervention

  • In addition, virtually all retailers of natural gas withdrew active natural gas quotes for large businesses from the market and declined to offer new quotes.  The justification retailers provided for this related to significant shortages in available gas supplies for 2023 and uncertainty regarding the effects of the federal government’s intervention

  • With very few to no market offers for natural gas available to large businesses that came out of contract at the end of December, many are now facing high default rates of up to $40/GJ

  • It is important to note here that retailers are exempt from the government’s gas market intervention.  As the intervention relates only to the sale of uncontracted wholesale natural gas, there is no requirement for retailers to adhere to the $12/GJ cap

  • Shell’s Queensland-based gas company QGC notified customers it was again accepting bids for 8 petajoules of wholesale gas supply for 2023. The new supplies were in addition to the 20 petajoules it had offered domestically since December

  • The competition watchdog has reduced its forecast for a gas supply shortfall on the east coast for this year, but says Queensland’s LNG exporters still have not redirected enough gas into the domestic market to head off shortages

  • The ACCC said it still expected a deficit in supplies in the eastern states this year of 30 petajoules, down from 56 petajoules forecast last July.

  • Despite the “shortage” in the east coast gas market, Australia has ironically ranked once again as one of the largest LNG exporters in 2022—on par with other major global producers, Qatar and the US.  Australia’s ten LNG projects have a total production capacity of 88.6 million tonnes per annum (Mtpa), currently the world’s largest.

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NEWS1
Accountant

Power bill shock to hit SA homes and businesses

 

 

The Malinauskas Government is actively considering expanding cost-of-living support in response to a projected electricity price increase of over 20% for some South Australian households and businesses. The Australian Energy Regulator (AER) released its draft default market offer (DMO) for the 2023/24 financial year, forecasting a year-on-year rise between $401 and $485 for households and $1151 for small businesses.

 

The DMO serves as a regulated price cap for energy retailers. Approximately 62,600 residential customers and 13,778 small businesses in South Australia will be directly affected by this potential price hike.

 

The AER will make a final determination on May 26, with the price changes slated to take effect on July 1. The unprecedented volatility in wholesale electricity markets, driven by high coal and gas prices and coal-fired power plant outages, has contributed to this increase.

 

The government's intervention to cap coal and gas prices has mitigated the impact, preventing a potential increase of over 50%. Despite this, concerns about the affordability of energy persist, especially for vulnerable communities.

 

South Australians are already grappling with some of the nation's highest power bills, making the potential price hike an additional strain on households and businesses. Premier Peter Malinauskas expressed the government's commitment to addressing the issue and is exploring measures to provide relief, particularly in the energy space.

 

The government is actively considering expanding eligibility for energy concession relief to support a broader range of South Australians facing financial challenges due to rising energy costs.

NEWS2

Regulated power prices set to surge 'at least 20 per cent' this winter as energy bill reprieve ends

 

 

Despite a significant fall in spot prices in the national electricity market, experts warn that prices are likely to remain historically high in the long term. While acknowledging the situation is not as dire as it could have been, there's an expectation that electricity prices won't return to previous levels.

 

The transition away from fossil fuels is described as a "rollercoaster" ride, marked by various factors such as falls in international energy markets, improved reliability at coal plants, increased output from renewable sources, and a mild summer.

 

Grattan Institute energy program director Tony Wood emphasised the need for sufficient new generation capacity, particularly "firm" capacity like batteries, pumped hydro, or gas plants, to replace retiring coal-fired plants.

 

Concerns were raised about Australia falling behind in building the necessary infrastructure for a low-emissions future, citing delays in projects like Snowy 2.0. Despite the challenges, experts underscore the importance of managing the risks associated with the energy transition.

 

While households may appreciate a temporary reprieve, the energy landscape remains complex, and addressing the infrastructure gap is crucial for a sustainable future.

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