Explanation of Why Electricity Prices Are So Expensive

neil on 28/09/2015 - 16:19

The Age: Explainer tackled the issue of why we have such high electricity costs.

Key notes:

  • Australia has the sixth-most-expensive energy in the world.

  • Your electricity bill is comprised of 3 costs

    • Wholesale and retail prices, based on supply and demand;
    • The cost of poles and wires, and;
    • The cost of environmental policies.

  • Nationwide the cost split is 39%, 53% and 8%.
  • Victoria is 46%, 46%, and 8%.

There is a bit of history about QLD, NSW as well as Victoria's brown coal. However, the key point for Victoria is the 46% meaning Victorian electricity providers are making quite the profit (on bad electricity plans). However, this also means the market is quite competitive and you can get good electricity plans. Continually compare electricity providers to see if you are getting the best deal. Electricity Comparison Sites

Home & Garden Electricity

Comments

  • Diji1 on 28/09/2015 - 17:38

    The market is not competitive, are you having a joke?

    As the article points out electricity prices have TRIPLED in 6 years, on what absurd planet are you living where that is competition on price? Australia has the sixth most expensive energy in the and that's "quite competitive" according to you?

    I could believe it if the competition was to see how high you could drive the price, that'd be reality matching up to the drivel if they were saying that rather than pretending fantasy competition exists where prices keep doubling every few years.

    • neil on 28/09/2015 - 20:13
      +1

      I think you misunderstand. Competitive =/ cheap, Competitive means lots of competitors in the market with a varying range of prices/offers.

      Victoria is the most deregulated electricity market in Australia. As per above, 46% of a Victorian's bill comes from wholesale & retail prices. This equates to higher profits but it also means a customer base that is looking to churn to other providers with all of the deals offered.

      Non-competitive would be Tasmania as you only have a choice of one provider, the government.

      Quite enjoying using Powershop where I can pre-purchase electricity rates.

  • iratepirate on 28/09/2015 - 17:40

    Because the energy companies were guaranteed a profit margin on top of any infrastructure investment - "$45 billion spent between 2009 and 2014 on network upgrades of pretty questionable value" as the article puts it, we have been paying for a gold plated network that we don't need.

    The article also says that "Four of the six most expensive places for electricity were Australian states". What a stuff up!

    And now to deter you going solar they've increasedthe daily supply costs and decreased the KW/h costs, so if you are connected to the grid at all you will pay more.

  • ItsMeAgro on 28/09/2015 - 18:04
    +1

    So, so keen to get off the grid completely. Solar and a Tesla home battery or two with a backup generator sounds really good right now, even if it'll take forever to pay itself off…

    • iratepirate on 28/09/2015 - 18:11
      +1

      I wouldn't be surprised if off grid solar becomes highly regulated to protect the big energy company monopolies.

  • burningrage on 28/09/2015 - 19:25

    Tesla Powerwall is coming this November. I think AGL offers battery storage already.

    • scrimshaw on 28/09/2015 - 19:47
      +1

      The fight is on now.

      I kind of like where power storage is going but it's simply not compatible with the Australian power company's business model. They don't like you feeding energy back into the grid (or storing excess energy) to offset your utility costs because it means less revenue for them. They'll put in all sorts of red tape to ensure the initial installation is costly, needs really (costly) regular maintenance and lock the customer into using their own brand of power storage.

  • eatwell365 on 29/09/2015 - 00:17
    +1

    Correct me if I am wrong,

    Thought the high energy bill was the result of the Government sold out its people. The infrastructure was so badly maintained in the past when power company was run by the government, It then sold off the assets to private companies which invested money to upgrade the system, in return for a very handsome guaranteed return paid by Australian people. Nowadays Australia has higher density population, theoretically the maintenance cost (of poles and wires) should come down instead of going up.

  • tonyjzx on 03/10/2015 - 21:19

    Typical inefficient Australian industry.

    Also I think that the uptake in solar has made it difficult for people who havent taken up solar. If you have 10% of your customer base suddenly with much smaller bills and yet you have already budgeted your business to run on 100% of the people with $x,xxx bills a year, you suddenly have a shortfall which you take out on the people who havent switched to solar.

    Also I think it shows that Australian industry isnt really able to be 'proactive' in moving with market trends. Still on coal, still soaking captive audiences.

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