Australian households saved $65 on their power bills over the past year, according to the competition watchdog.
The latest Australian Competition and Consumer Commission report into the national electricity market, released on Sunday, found average annual residential electricity bills dropped about 4% compared with the previous year.
But despite “modest” savings the watchdog warned that electricity affordability “is still a concern that requires attention” – particularly because solar panels reduce bills for those households which have them, while others shoulder the cost of feed-in-tariffs.
The treasurer, Josh Frydenberg, and energy minister, Angus Taylor, took credit for the result, citing the Coalition’s reforms creating a default market offer which the ACCC found had a positive impact since it came into force on 1 July.
Between July 2018 and September 2019, the average annual residential bill was $1,509, a decrease of $65 in real terms.
But average bills and effective prices are “well above levels a decade ago”, up $254 – or about 20% – since 2007-08, the ACCC said.
In that time, environmental costs such as solar feed-in-tariffs added $103 to the average bill and network costs added $81. Retail and other costs contributed $53 and wholesale electricity prices added $20 to the average bill, but retail margins shaved $3 off.
Network costs peaked in 2014-15 and have since declined, but environmental costs continue to add to bills, including $8 per customer in the past year.
Customers with solar panels now make up about 16% of all residential customers in the national electricity market.
The average household pays about $550 a year more than a household with solar panels.
ACCC chair Rod Sims said the regulator is concerned about additional costs imposed by schemes such as feed-in-tariffs on households that cannot access or afford to install solar panels.
“The cost of installing solar panels has reduced significantly in recent years, so environmental schemes like the premium [feed-in-tariffs] rebates are no longer needed to make solar an attractive option for those households that can afford it,” he said.
“Indeed, all customers who can, should consider how much they could save by installing solar panels.”
Reforms to retailer pricing was estimated to benefit 900,000 customers on default electricity plans in South Australia, NSW, south-east Queensland and Victoria, with those consumers receiving automatic reductions in their prices.
“Households on default plans … are estimated to save between $152 and $455 in 2019–20, depending on their state and distribution zone,” Sims said.
The ACCC recommended a suite of changes to further lower bills including:
Writing down the value of state-owned network assets or providing rebates on network charges for privatised assets where there has been over-investment
Abolishing environmental green schemes where they are no longer needed or moving from a direct charge to energy users to governments picking up the bill for green schemes in their budgets as a “more equitable option”
Improving the ability for customers to engage in the retail market and identify the cheapest electricity plans by reforming the way retailers are allowed to price and advertise
Facilitating new investment in generation in a way that enhances competition to place downward pressure on wholesale costs
Frydenberg and Taylor said: “While we welcome the positive findings of the ACCC, the government remains committed to getting prices down and maintaining the reliability of our electricity system.”
The federal government is still considering a list of proposed new electricity generation projects to support through its underwriting scheme, including a coal generator upgrade at Lake Macquarie proposed by Delta Energy.
