High electricity prices are here to stay, according to a new Grattan Institute report that calls on politicians to tell Australians the truth about the future of energy costs.
Wholesale electricity prices rose across the National Electricity Market (NEM) by 130 per cent between 2015 and 2017. The price paid for electricity traded in the NEM also more than doubled, from about $8 billion to $18 billion, and household bills increased by up to 20 per cent in 2017 alone.
But it is impossible for governments to fix the problem, because most of the price rises have been caused by issues beyond their control.
However (gaming or market manipulation) may add as much as $800 million to the price paid for electricity traded in the NEM in some years. The rules should be changed to eliminate or at least limit gaming.
But wholesale electricity prices are very unlikely to return to previous levels of around $50 per megawatt hour.
Over-supply, as a result of historic over-building, is disappearing, gas prices will stay higher than they were in the past, and new generators using any technology – including coal – cost more.
Article originally published by The Grattan Institute