The Australian government recently released a new Treasury analysis which indicates that wholesale electricity prices are forecast to drop significantly in the eastern states.
The analysis has revealed that the eastern states can expect a drop in wholesale prices of between 29 and 44 per cent, depending on the state. Queensland is expected to experience the largest drop (44 per cent), followed by NSW (38 per cent), South Australia (32 per cent), and Victoria (29 per cent).
The drop in wholesale electricity prices is largely due to the increased supply of renewable energy sources, such as solar and wind, which have become increasingly cost-competitive with traditional sources, such as coal and natural gas.
This increased supply of renewable energy sources has brought about a decrease in wholesale electricity prices, which is expected to benefit consumers in the eastern states.
The analysis conducted by the Treasury estimates the drop in wholesale prices will lead to a reduction in retail electricity bills by $230 in 2023-24.
This reduction in electricity bills is expected to benefit households and businesses in the eastern states. It is also expected to provide a much-needed boost to the Australian economy, as lower energy costs can lead to increased economic activity and job creation.
The data from the Australian Securities Exchange showed, without the Albanese government’s gas price cap in place, households could anticipate a 56% increase in power bills over the next two years if prices continued to rise as they did in November of 2022.
In December, the federal government implemented a contentious policy to try to curb skyrocketing power prices, capping new east-coast wholesale gas contracts at $12 per gigajoule for a period of 12 months.
Jim Chalmers, the Treasurer, has celebrated the data as evidence the Albanese government’s plan is beginning to have an impact.
“We acted due to the forecasted price rises being untenable. Our intervention will help to reduce power prices for families and businesses, however, this is not a quick fix and will take some time. Fortunately, we can see that the plan is already beginning to have an effect,” he said.
