The ACT will cut power prices this year, bucking a trend of soaring power bills for the rest of Australia as the territory benefits from long-term contracts that lock in low-cost renewables.
Base fares will drop a minimum of at least 1.25% from July 1, the ACT independent competition and regulatory commission said Monday. “This equates to a real decline of 4.93% after excluding inflation,” he said.
The reduction in the regulated rate will reduce the annual electricity bill by $23 for average households using 6,500 kilowatt hours of electricity per year and $88 for average non-residential users.
“The ACT is the only jurisdiction in the national electricity market where regulated prices will decrease in 2022-23,” Chief Commissioner Joe Dimasi said in a statement. Standing offers are now cheaper than those offered in New South Wales, Victoria, Queensland and South Australia, he said.
“The price drop is due to lower costs from the government’s ACT program this year, which more than offset higher wholesale electricity costs,” Dimasi said.
Wholesale prices in the national electricity market more than doubled in the March quarter compared to the previous year and have increased further since. Russia’s invasion of Ukraine has pushed up global energy costs, while regular outages at Australia’s aging coal-fired power plants have recently added to soaring local prices.
Electricity prices will rise by up to 18% from July in parts of the national electricity market after wholesale prices rose 49% in Queensland and 41% in New Wales du South, Australia’s energy regulator said last month when it released default market prices for 2022-23.
The long-term contracts designed by the ACT government to allow it to achieve 100% renewable energy have served to protect its energy users from the higher prices faced by other regions.
ACT Deputy Chief Minister and Energy Minister Shane Rattenbury said average household bills for the coming financial year would be around $800 lower than in New South Wales neighbor.
“It’s underlined how fossil fuels are subject to the vagaries of geopolitics, which are completely beyond our control,” Rattenbury said. “Locally produced renewable energy is entirely under our control.”
The territory’s wholesale price averaged about $90 per megawatt hour, well below the $200 to 300 MW/h other states would have paid, he said.
Simon Corbell, the architect of the ACT program when he was the territory’s climate and energy minister, said: “some form of contract is good for consumers, good for the development of renewables and beneficial for emission reductions.
“ACT energy users will be protected during this period of very high prices because of the fixed prices they pay for their renewable energy,” said Corbell, who now leads the Clean Energy Investor Group.
“They will undoubtedly be in a better position in relation to the consumers of the country, and there is the complete offsetting of the emissions profile of the electricity sector, a very important result,” he said.
ACT achieved 100% renewable energy in 2020.
The auction method in the ACT which set a price for renewables was a lifeline for the renewables industry in Australia after the arrival of the Abbott Coalition government in 2013 which dampened investor confidence in the sector.
Other states, including Victoria and NSW, have since adopted the approach to encourage more clean energy supplies.
“ACT is a pioneer in renewable energy, not only at home but also internationally,” said Richie Merzian, director of the climate and energy program at the Australia Institute. “It was the first major jurisdiction outside Europe to achieve 100% renewable electricity status.
“Switching to renewables is not just good for the climate, but good for the wallet, with Canberran benefiting from cleaner and cheaper energy,” Merzian said.