Electricity prices falling

Last week, we reported on the massive power bills households have been receiving with people spending more time at home during the pandemic, but apparently electricity prices have been falling.

That’s according to the Australian Competition and Consumer Commission (ACCC), which released its electricity markets report on Monday with the suggestion that customers could save up to $219 a year by shopping around.

According to the ACCC report, electricity prices paid by many residential customers in NSW, South Australia, south east Queensland and Victoria fell between 2018 and 2019.

Those figures are based on an analysis of extensive data from more than 8.5 million electricity bills.

ACCC chair Rod Sims said the data from the bills of more than 1.5 million customers of 11 electricity retailers showed that there were now more customers on market offers and fewer on the usually more expensive default standing offers.

“While it is still early days, the analysis of this large unique dataset indicates that electricity pricing and advertising reforms introduced in July last year have been effective in protecting customers on standing offers from excessive pricing and bringing down electricity bills,” Mr Sims said.

Impact of COVID
As we reported on Friday, there has been a spike in power usage resulting from more people spending more time at home, and the ACCC has also released an additional report examining the impact of COVID-19 on affordability and consumption.

“The supplementary report shows that overall electricity consumption fell by 2 per cent in the second quarter of 2020, compared to the same time last year. Residential consumption rose significantly during the nationwide COVID-19 lockdowns, and because of colder weather in some states, while business consumption plummeted,” Mr Sims said.

For example, Melbourne residential electricity consumption rose by between 10 and 30 per cent in April and May 2020, depending on the weather, compared to the same period in 2019.

“The pandemic is exacerbating energy affordability concerns. At a time when many consumers are experiencing reduced incomes, increased electricity consumption could lead to rising household debt and financial strain,” Mr Sims said.

“Available data suggests more customers are a month behind in bill payments and energy affordability may become an even bigger concern in coming months.”

Craig Memery from the Public Interest Advocacy Centre (PIAC) said many people were reporting bill increases in the hundreds of dollars.

“The nub of the problem is that people have been required to be at home, they’ve lost jobs, they’ve lost income,” he told the ABC.

“And at the same time, people are using a lot more energy.

“In March, we did some analysis and estimated that some people were going to have energy bill increases in the order of $200 a month, and we have seen that come to fruition since, particularly in the colder winter months.”

He said some people were taking extreme measures to ensure they could pay their bill.

“We see people going without essential energy use for heating, for cooling, for heating water so they can clean and shower,” Mr Memery said.

“We see people taking on payday loans and unsustainable loan options to allow them to pay their bills and they often come with exorbitantly high interest rates that place people in worse and worse debt.”

Lower prices
The electricity market report looked at combined data in NSW, South Australia, south-east Queensland and Victoria for the third quarter of 2019 compared to the same period in 2018.

It found that the median effective price paid by residential customers on standing offers fell by 4.4 per cent, whereas the median effective price paid by residential customers on market offers fell by 3.5 per cent (residential).

While concession and hardship customers are generally paying lower prices than other residential customers, those who are on payment plans due to financial difficulty are paying more than concession and hardship customers.

The electricity market report found that less than 60 per cent of payment plan customers on market offers with conditional discounts, such as paying on time, did not meet the conditions.

“There are still too many customers who do not achieve conditional discounts on these types of plans, which means they pay higher prices that can exacerbate existing financial difficulties,” Mr Sims said.

“We urge retailers to abide by best practice for their vulnerable customers and help them move to the most suitable electricity plans.”

Shopping around
The report found that the median effective price paid by customers on market offers was lower than that paid by customers on standing offers.

“Residential customers with a median annual electricity usage could save around $219 a year by switching from a standing offer to a market offer,” Mr Sims said.

Do you shop around for your electricity? Do you have a market offer or a standing default offer? Have you noticed cheaper electricity prices as a result of shopping around?

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Related articles:
https://www.yourlifechoices.com.au/finance/news/thousands-struggling-to-pay-power-bills
https://www.yourlifechoices.com.au/finance/news/mum-and-dad-energy-projects-take-off
https://www.yourlifechoices.com.au/finance/news/supermarkets-no-longer-accepting-cash

Written by Ben

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