The Australian Energy Regulator (AER) has announced another electricity price hike – between 2.5% and 8.9%. For 20 years, we’ve been told wind and solar are the cheapest forms of energy, yet prices keep going up!

I questioned the AER about when Australians might see relief from these crushing power bills. Their response? No clear path to returning to the affordable prices we had just 5 years ago. Even more concerning – they recently added “emissions reduction” to the national electricity objectives alongside price, quality, safety, reliability and security of supply. When I asked for examples of projects that were approved because of this new emissions target that wouldn’t have been approved before – they couldn’t name a single one!

The truth is clear: We’ve gone from having the cheapest electricity in the world to being among the most expensive. These price increases aren’t accidents – they’re the direct result of failed green energy policies.

Australians deserve affordable, reliable power. Not expensive virtue signalling that drives up costs for families and businesses.

Transcript

Senator ROBERTS: Thank you all for being here today. The default market offer for electricity prices is going up yet again. You published a draft notice, I understand, contemplating rises between 2.5 per cent and 8.9 per cent. For 20 years, Australians have been told that wind and solar are the cheapest form of energy, yet electricity prices are going up again. Mr Oliver, are you seeing any kind of indications in the bill stack that show you will be able to actually cut the default market offer for electricity prices in the near future?  

Mr Oliver: There are a few different components, as you mentioned, in that stack that go to comprise the default market offer. It is ultimately, of course, only the benchmark offer that’s applicable to standing offer contracts. That’s less than 10 per cent of customers in most regions. Most pay less, of course, because they’re on market offer contracts, which typically sit under those default levels.  

Senator ROBERTS: It is representative, isn’t it?  

Mr Oliver: Not representative, no. I’d say it’s more of a safety net. So it’s more at the upper end of what most consumers would pay. For example, a customer might not have gone into the market, not shopped around for a market offer, and might be on a standing offer contract. As I say, that’s generally less than 10 per cent. But the vast majority of consumers pay less than the default market offer price. Indeed, the ACCC put out a report in December last year as part of their electricity price monitoring saying that roughly 80 per cent of consumers could pay even less than they are today if they continue to shop around.  

Senator ROBERTS: So do you see any signs of the default market price coming down?  

Mr Oliver: There are a few key components. The biggest variable is wholesale cost. Network costs are reasonably steady year on year. Retail costs have gone up, at least in our draft decision this year, but we’re still studying those. In terms of the wholesale cost component, we have seen over the last year some high-price events in the spot market, some volatility in the spot market. That is continuing to put upward pressure on the forward contract market, the prices that ultimately are responsible for setting a lot of the wholesale energy cost. They’re difficult to predict year on year. We don’t necessarily see them continuing to increase. If market conditions alleviate, that wholesale cost can potentially come down. We will, of course, look at those again more closely before we put out our final decision.  

Senator ROBERTS: My next question was going to be this, but I think you’ve answered it: in the data you’re seeing, is there any realistic hope that electricity prices can go back down to what they were five years ago under the current policy settings?  

Mr Oliver: Well, it’s a question of time. We don’t anticipate that kind of decline between now and the final decision. But there are obviously plans in place to continue the rollout of renewable generation and other forms of generation as well across the energy market, across the NEM, and, as we see more of that generation capacity coming into the system, that will alleviate pressure on wholesale costs. There’s work underway at the moment to look to orchestrate and utilise all of the consumer energy resources that we have in the system at the moment—20 gigawatts of rooftop solar, for example, which could be utilised more effectively to also bring down those wholesale costs as well. There are various ways. It’s a number of pieces that need to be looked at to do that. But yes, all of those trends will, over time, see the wholesale cost of energy come down.  

Senator ROBERTS: So those trends will help reduce the full bill stack?  

Mr Oliver: Yes.  

Senator ROBERTS: Emissions reduction was recently added to the national electricity objectives of price, quality, safety, reliability and security of supply. Can you provide an example of a project that went ahead after the emissions objective was added that would have been rejected under the previous objectives, or a project that was prioritised higher?  

Mr Oliver: I can’t think of one specific project that would meet that criterion. We would probably need to take that on notice to see if we could identify one. It is, as you described the objective quite correctly, one that has a number of different facets. So, whenever one is making a decision that requires the application of that objective, it’s about weight and deciding how various things are taken into account. What the amendment does is say quite explicitly that one of the things to be considered is emissions targets and objectives that are enshrined in policy and legislation, but that doesn’t necessarily point to a project which then gets up that might have otherwise failed. I can’t think of one now, but we might take that on notice as well, just to confirm that.  

Senator ROBERTS: So you had four factors: quality, safety, reliability and security of supply. You’ve had added now emissions reduction. So you can’t see any project that has been brought forward because of emissions reduction at the moment?  

Mr Oliver: I can’t think of one now. I’m glancing at my colleagues and they’re not nodding either, but we’d perhaps take that on notice just to see. It may well be that the answer would be that there’s no project that would meet that specific criterion. It affects other things of course, in terms of proposals for expenditure in a network proposal, for example. There might be a stronger case for investment in a particular area that might otherwise not have been as strong a case. But those are very complicated and multifaceted decisions where you’re looking at a lot of different things.  

Senator ROBERTS: How do you assess the relative weights of those now five criteria? 

Mr Oliver: We don’t do it in any specific quantitative sense. If, for example, it is an expenditure proposal, we would be looking at the driver behind the proposal, why the network, if it is a network project, says that they wish to undertake that expenditure, who they’ve consulted with, which of the objectives they’re trying to meet, and whether they’re doing it at the most efficient cost.  

Senator ROBERTS: Thank you