Tasmanians have been told to prepare for the biggest increase in electricity prices in a decade as spiraling wholesale electricity costs take their toll on the island nation.
Energy consultant Mark White expects an orderly price hike of more than 10 per cent to be announced later this month, and is calling for state government intervention to keep them in the “modest” range of 5 to 10 per cent.
Tasmania’s electricity system and prices differ slightly from the mainland, but issues plaguing the rest of the nation will still have an impact.
Who sets energy prices in Tasmania?
Tasmania’s economic regulator sets a so-called “permanent supply,” which is the maximum price consumers pay for the electricity they use.
The regulator issues a price setting each year, usually shortly before the new fiscal year.
Pricing factors regulated in the cost of running poles and wires – the cost of the grid already set by the Australian energy regulator and cannot be changed at the state level – the wholesale price, renewable energy certification costs and retail operating costs.
The wholesale price is largely determined by the wholesale price in Victoria, as well as the inflows into the Tasmanian water system.
This means that electricity in the island nation is usually slightly less expensive than in the mainland states.
To give you an idea of how high the wholesale price is in Tasmania, it is currently around $140 per megawatt-hour. That’s about $100 more than it was this time last year. A price hike in ‘permanent supply’ for the next fiscal year is certain.
When do they make the decision to raise prices?
The Tasmanian economic regulator’s decision for the 2022-23 fiscal year is due later this month, with new rates taking effect from July 1.
Tasmania is generating its own water power – why are we seeing spikes like other nations?
There is a lot of pain to be felt elsewhere in the country.
Massive wholesale price increases have led to huge increases in New South Wales, South Australia and Queensland to a standard energy price known as virtual market offerings, by as much as 18.3 per cent.
Tasmania is tied to the national energy market, as is any other state and territory except for Western Australia and the Northern Territory.
It is a wholesale market where different countries provide power to it and the national price is determined based on supply and demand.
The wholesale price in Tasmania has been largely set by Victoria, in line with a decision by the Australian Competition and Consumer Commission.
This means that even though the entire state of Tasmania can power itself with its hydro dams in a year of average rainfall, what happens in other states still has a huge impact on what happens here.
Experts also warn that national price increases mean that smaller retailers that buy most of their power from the wholesale market may have to crash, which means less competition in the market.
One of those, power provider ReAmped, has told its 80,000 Australian customers to go elsewhere because it can no longer provide an affordable service.
These issues could also affect competitors to Tasmania’s dominant (and government-owned) Aurora Energy.
Hey, haven’t we disengaged from the national energy market?
The Liberal state government promised to do so in the 2018 election, promising to cut electricity prices by up to 10 percent.
But a year after that happened, it still hasn’t happened, and a number of key stakeholders think it’s a bad idea.
Asked about the disengagement in Parliament on Thursday, Prime Minister Jeremy Rockliffe did not provide a definitive answer on whether the plan would continue to move forward.
But state Energy Secretary Jay Barnett made clear in a statement that exiting the national energy market would “undermine investor confidence in the Tasmanian energy market and potentially jeopardize billions of dollars of investment,” including the planned Marinus Link cable.
It is fair to say that we will be connected to the national energy market for some time.
How do I find a good energy deal?
White says market conditions mean there aren’t any good deals and everyone’s bill will rise.
And it comes at a disadvantage for families across the state, where the rising cost of living means they are already under a lot of pressure.
But in terms of what’s out there, White says some of Aurora’s competitors are offering lower prices — what’s called a market offer — but there may be trade-offs in terms of lower customer service standards and higher late fees.
He also says it’s hard to know if companies can face the same problems that ReAmped does due to a lack of public information about their operations.
If you’re wondering about the different energy retailers in Tasmania, and if you can get a cheaper bill, the federal government has created a website that lets you compare offers, called Energy made easy.
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