All things equal, significant energy bill cuts are coming in H2, 2024. The process will begin in March when the Australian Energy Regulator (AER) sets its provisional price benchmark for electricity retailer default offers in 24/25.
In the six-month reference period up to the end of 2022, the average power spot price was $269Mwh, thanks to the Albanese Government’s failure to contain the price fallout from Ukraine War profiteering.
To the end of 2023, it was $86.
In the six-month reference period leading up to the end of 2022, power futures price averaged around $130Mwh.
In 2023, it was about $95.
The price cut should be large enough to reverse all of 2023’s price rises.
However, there will be little relief in gas prices. The Albanese Government’s $12Gj price caps now act as tractor beam keeping prices high:
Though regional prices are still higher at around AUD16Gj:
This is embedding the next energy price shock:
Electricity giant EnergyAustralia has cast doubt over the ability of gas import terminals to fill a projected shortfall in supplies on Australia’s east coast, adding a code of conduct may hamper the industry’s appetite to sanction investment.
The competition regulator has warned extra gas will need to be transported from Queensland to Australia’s southern states to avoid winter shortfalls for 2024 amid a continuing tight outlook for users on the east coast.
Both industry and policymakers have been hopeful several large LNG imports plants dotted along the east coast would help bridge a looming gap, but EnergyAustralia said additional sources were required.
Origin Energy in October struck an agreement to potentially underwrite the development of Venice Energy’s LNG plant, as the company moves to secure supply routes ahead of a looming east coast domestic crunch.
However, EnergyAustralia also pointed to issues with the arrangement.
“The recent tentative announcement regarding the Venice terminal would have Origin as the sole off-taker for all import capacity,” EnergyAustralia noted.
“This type of arrangement suggests that suppliers using new facilities, in the context of declines in conventional production sources, could wield market power in a sustained manner and so may warrant responses from a policy or regulatory perspective.”
Today, gas imports would immediately shock the local gas spot market price to $16Gj and undo putative electricity price cuts.
The only thing that is more stupid than importing gas into Australia is letting the gas export cartel (which includes Origin) take control of the volumes.
Where are the regulators?
