Power Prices to Fall for Most Customers, With Bigger Drops for Businesses

"c0lo" writes:

Power prices to fall for most customers, with bigger drops for businesses:

Surging levels of renewable energy and better reliability from coal-fired generators are set to give consumers a break, with benchmark power prices to fall up to 10 per cent for consumers and more for small businesses.

In what will be welcome news for power users weary from years of big tariff hikes, the Australian Energy Regulator (AER) has decided to cut the default market offer (DMO) in several states.

The offer acts as a safety net by setting the maximum, or ceiling, price retailers can charge affected customers.

Fewer than one in 10 households are on a default offer, but experts say they are a key reference by which all other power prices are measured.

Power prices will fall by up to 7.7 per cent in New South Wales, 10.7 per cent in south-east Queensland, and 1.1 per cent in South Australia.

Some customers in South Australia, however, will see an increase of 1.4 per cent.

Climate Change Minister Chris Bowen said the price drops were proof that the growing amount of renewable energy in the grid was gaining momentum.

"We've just hit 50 per cent renewables, and renewables are the cheapest form of energy, and that puts downward pressure on prices," he said.

The falls come amid changes to the regulated pricing system, which now includes flat-rate tariffs and time-of-use charges, which vary during the day.

As well as this, Mr Bowen said the AER had stripped out unnecessary costs that could be recovered from consumers through the default offers.

"We reformed the default market offer to really make sure that only the absolute necessary prices or costs are included, [for example] very minimal allowances for energy companies to go and get new customers," he told AM.

"With a lot of pressure on energy costs, we looked at this and said it was very hard to justify [these sorts of costs] so took them out."

The range in prices is due to some people being on a flat rate, while others are on a time-of-use tariff, which changes throughout the day.

But small businesses in all three regions will see much bigger falls in their power bills, down as much as 12.8 per cent in South Australia, 14 per cent in south-east Queensland, and as much as 20.9 per cent in New South Wales.

In Victoria, which is covered by a separate regulatory regime, benchmark prices will fall by 5 per cent from mid-year under a decision by the Essential Services Commission.

AER chair Clare Savage said today's outcome reflected easing cost pressures in parts of the electricity supply chain.

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