Electricity prices have been rising alarmingly over the past few years. It’s hard making sense of all the electricity companies all trying to win your business with amazing and complex sounding offers.
The 30% discount on offer may not be the best offer… you need to take into account the discount offered and the rates to really know how much you’re saving.
Locking in rates may seem good now, but could cost you big in the long run. Comparing your usage habits can help us to properly determine if locking in rates is right for you.
When you are choosing a better energy deal there are many different factors to compare to ensure you get a good deal. Daily usage, where you live, contract type, meter type and rates are just some of the items to compare… and the list goes on.
The good news is you can speak to one energy consultants for free now. Click here for a call back or speak to one of our Youcompare energy consultants for free on 1300 683 009.
Electricity prices have been rising alarmingly over the past few years. It’s hard making sense of all the electricity companies all trying to win your business with amazing and complex sounding offers.
AN average $160 cut to household electricity bills is at stake when the Supreme Court on Friday begins hearing AGL Energy’s challenge to the electricity regulator’s decision to lower power prices.
The state’s largest electricity retailer argues the Essential Services Commission of South Australia wrongly exercised its power to review prices when it decided on October 2 to amend a 2010 price determination following a review forced by welfare groups.
As first reported on adelaidenow, AGL Energy announced late on Tuesday it would launch legal action against ESCOSA in the state’s highest court.
ESCOSA’s change stands to cut an average $160 from the electricity bills of South Australians on standing contracts, although energy retailers have announced savings wouldn’t be passed on to about 570,000 households on market contracts.
Premier Jay Weatherill yesterday said while AGL Energy had the right to pursue legal action, the State Government wanted a “strong regulator that holds their feet to the fire in relation to energy prices.”
“The regulator’s made a decision about an 8 per cent reduction in electricity prices with the standing contract, and obviously we support that, we advocated for that,” he said.
AGL Energy claims the decision in SA, along with a similar decision in Queensland, would reduce profit by about $45 million in the 2012-13 financial year, and curb investment in electricity networks.
The company will have its first opportunity to put their position to the Supreme Court during a directions hearing on Friday.
In a summons obtained by The Advertiser, AGL Energy said the commission’s draft decision was a breach of the law.
The company also claimed that the draft determination was an improper use of ESCOSA’s powers, as it took into account irrelevant factors when making the determination, while failing to consider other relevant factors.
SA Council of Social Service executive director Ross Womersley said AGL Energy’s actions clearly demonstrated a lack of interest in the rights of the state’s energy consumers.
“AGL Energy have clearly indicated their interest is primarily only in their shareholders,” he said
http://www.adelaidenow.com.au/business/sa-business-journal/power-bill-cuts-at-stake-in-agl-fight-against-escosa/story-e6fredel-1226530737639” title=”Power bill cuts at stake in AGL”>
JULIA Gillard’s announcement yesterday that she would take action to “save families up to $250 a year on electricity bills” is readily understandable. With a long, hot summer in prospect, Australian families are in for an electric shock.
But Gillard’s efforts to blame Coalition governments for the price hikes are just more of the finger-pointing that has poisoned relations between her government and the states. Were Gillard serious about cutting bills, she would get rid of green imposts that hit consumers for no discernible environmental benefit, and encourage the speedy privatisation of inefficient, state-owned power businesses. Instead, she is doing the opposite.
That families will suffer from high electricity charges is undeniable. With airconditioning ubiquitous, household power consumption surges in hot summers. At the same time, electricity prices are now 40 to 50 per cent higher than when Labor came to power in 2007 and have increased by 10 to 20 per cent in the past year alone.
So Christmas bills will bring a double whammy: higher quantities consumed, and a steeply increased price per unit.
In Queensland, for example, the typical household will consume 50 to 100 per cent more power in a hot summer than in the winter and spring months. With the price 10 to 20 per cent higher than last year, that will translate into a slug of $100 compared with last summer’s bill and $300 to $400 more than last spring’s.
Why charges are now so much higher is no mystery. Again, consider Queensland: climate change charges built into electricity prices have increased tenfold since 2007-08, and now exceed $1 billion a year. In 2007, Queenslanders paid less than 3 cents in the dollar on climate change imposts on electricity; now, they pay 17cents.
With the carbon price set to increase by nearly a third over the next five years, that share is only going to rise. Indeed, despite everything Gillard says, forcing up electricity prices, thus inducing households to slash their consumption, is crucial to her government’s climate change policies: as Treasury said in its carbon tax report, reducing “electricity demand is an important source of abatement, comprising over 40 per cent of the (target) cumulative abatement to 2020”.
To kick-start that choking of demand, electricity generation costs alone seem set to rise by between 50 per cent and 145 per cent over the period 2008-2015. And network costs (the costs of transmitting and distributing electricity) have been rising too.
Those costs, that account for about half the average household bill, have increased by 77 per cent since 2007-08. In large part, that reflects the cost of replacing network assets installed in the electricity investment surge that went from the late 1960s to the 80s.
But greater spending has also been driven by the need to strengthen the network to cope with rising peak demand.
And adding to the cost pressures, the NSW and Queensland Labor governments imposed tougher reliability requirements in the early to mid 2000s, following strong public reaction to widespread blackouts.
Unfortunately, exactly like the National Broadband Network, those tougher reliability standards were never subjected to cost-benefit appraisal.
Read More: http://www.theaustralian.com.au/opinion/columnists/pms-power-plan-cant-fix-shock/story-fn7078da-1226528456409
THEY account for less than 4 per cent of our electricity generation now, but solar and wind could be cheaper than coal by 2030, according to the Climate Commission.
Chief commissioner Professor Tim Flannery said rooftop solar panels may already be cheaper than conventional electricity in areas with high power prices, such as south-west Western Australia, and some regional areas.
Solar generates about 0.3 per cent of the nation’s electricity and he said the industry was set to boom as costs fell and markets expanded in places like India and sub-Saharan Africa.
”If you had looked at penetration of mobile phones into the market 15 years ago, you would have seen a similar sort of thing,” he said. ”These technological changes can happen incredibly quickly.”
About 754,000 households and businesses have installed solar panels.
”I think a lot of people are saying ‘why would we be hostage to ever increasing electricity prices’?” Professor Flannery said. ”The price of production has dropped 75 per cent in four years, this is now affordable technology.”
Australia aims to generate 20 per cent of its energy through renewables by 2020. That figure is now about 10 per cent, two-thirds of which comes from hydroelectricity, nearly a quarter from wind and 3 per cent from solar.
The Generating a Renewable Australia report to be launched on Monday in Sydney by Professor Flannery and fellow author, Climate commissioner Professor Veena Sahajwalla, reiterates that global carbon dioxide emissions will need to be near zero by 2050 to ensure a two-thirds chance of keeping the planet’s average temperature less than 2 degrees above pre-industrial levels.
IF THERE is money to be made in government-regulated assets such as toll roads, electricity and gas, it does not take long for Macquarie Bank to show its hand.
And with the likelihood of a rollout of smart meters in NSW, the bank is only too keen to help. The introduction of the meters is under way in Victoria and this week the NSW government disclosed it had established a working party to study their introduction in NSW.
So-called smart meters can be read remotely and the power supply also controlled remotely. As a result, they promise significant savings for power companies, but with uncertainty about their benefit for most households.
But the poor experience in Victoria, where the cost of the rollout has risen to more than $2.3 billion, from the initial estimate of $800 million, and a lack of household benefit from the move, threatens to derail the proposal in NSW before it gets off the ground.
Recently, the power industry overseer, the Australian Energy Markets Commission, opened the door to the possibility of taking meters out of the hands of the power distributors and putting them into independent management, in a bid to drive change.
Macquarie Bank, for one, reckons electricity retailers are the natural owners of the meters, since they already hold the supply contracts with electricity consumers.
This would involve taking the metering business out of the hands of the distributors, such as Ausgrid and Endeavour Energy in NSW, or Citipower, Jemena or Powercor in Victoria, in favour of having the retailers such as EnergyAustralia, Origin Energy and AGL run it.
In a submission to the Productivity Commission review of electricity networks, Macquarie argued power retailers were better placed to assess and manage the risk of the introduction of meters – and face the loss of customers and market share if they have an uncompetitive product.
For most power users, the lack of clear benefits from smart meters means there is natural concern that their introduction will emerge as a new revenue stream for power companies.
Coming as electricity prices are surging to fund an upgrade to the electricity network, without readily identifiable positives, resistance will be acute.
Read more: http://www.smh.com.au/business/macquarie-eyes-smart-meter-rollout-20121128-2aeti.html#ixzz2DZRVmSzC” title=”Macquarie eyes smart meter rollout” target=”_blank”>http://www.smh.com.au/business/macquarie-eyes-smart-meter-rollout-20121128-2aeti.html#ixzz2DZRVmSzC
THE impact of the resources boom is soon to be felt by NSW households as surging gas prices from export projects in Queensland force up household gas bills.
AGL has applied to the NSW government pricing regulator IPART, the Independent Pricing and Regulatory Tribunal, to raise gas prices by an estimated 10.4 per cent from mid-next year, with further steep, although unspecified, price rises expected over the following two years.
Rising gas exports from eastern Australia will push up domestic prices since international prices are more than twice as high.
The impact is compounded by the fact that AGL’s long-term gas purchase contracts from producers are expiring over the next few years, leaving it fully exposed to an expected surge in gas prices.
As it has yet to finalise its new gas purchase contracts, AGL has not indicated the likely rise in gas prices that will occur in 2014-15 and 2015-16 in its application to the regulator.
The rises come in the wake of large rises in electricity prices, with increases of up to 20 per cent taking effect from July 1 just the latest.
The Australian government said it will phase out a solar incentive program in January, six months earlier than scheduled, to cut electricity bills for homes and businesses next year by as much as A$100 million ($103 million).
The decision “will strike the appropriate balance between easing upward pressure on electricity prices and supporting households and suppliers who install solar” systems, Climate Change Minister Greg Combet said today in a statement.
The government program provided additional support for small-scale solar power by multiplying the number of certificates the systems would create under the government’s Renewable Energy Target, according to the statement.
The early removal of the incentives is a “decisive and positive step by the government toward minimizing the cost burden of the renewable energy target on Australian families and businesses,” Origin Energy Ltd. (ORG), Australia’s largest electricity retailer, said in an e-mailed statement.
The Sustainable Energy Association of Australia said the decision was “untimely and unnecessary.” Electricity regulatory reform would dwarf savings from the government’s announcement today, according to the industry group, which represents companies from Rio Tinto Group to Wesfarmers Ltd. (WES)
THE International Energy Agency (IEA) says electricity prices around the world are expected to rise by up to 15 per cent over the next decade.
IEA executive director Maria van der Hoeven says while there would be some regional differences, there would be a double digit increase globally.
“Electricity prices are expected to increase everywhere in real terms over the coming decade by 15 per cent on average,” Ms van der Hoeven told the Australian Institute of Energy national conference in Sydney today.
“That’s principally due to rising fuel prices and also due to renewable (energy) subsidies. Where renewable subsidies are passed onto consumers through electricity prices, the additional tariff component can be substantial.”
Ms van der Hoeven said electricity prices were highest in Japan and the European Union, well above those in the United States and China, due to higher fuel costs and higher capital costs and renewable subsidy costs.
Coal would remain the leading global fuel for electricity generation, given its use by the rapidly growing economies of China and India, among others, Ms van der Hoeven said.
Renewable resources would be the world’s second largest global fuel for power generation by 2015, overtaking natural gas, she said.
“After a period of very strong growth, renewable energy resources have reached a crossroads as some governments look at the undoubted benefits, yes, but also look critically at how renewables are being supported and how much that is costing,” Ms van der Hoeven said.
A rebate for rooftop solar panels will be halved six months earlier than planned in a move blasted by an industry group as “diabolical”.
Climate Change Minister Greg Combet announced the solar credits scheme would end in January next year “due to continued strong demand for household solar”.
In a statement, Mr Combet said the subsidy cut was expected to save households between $80 million and $100 million on electricity bills next year.
“Phasing out the [scheme] early will strike the appropriate balance between easing upward pressure on electricity prices and supporting households and suppliers who install solar PV,” he said.
According to the government’s figures, the level of support for a 3-kilowatt solar panel system will fall about $800-$1,000 across most state capitals. The current assistance for such a unit drops from $2,976 in Sydney to $1,984 from January 1, while the fall in Melbourne is from $2,528 to $1,696.
John Grimes, chief executive of the Australian Solar Council, said the surprise move would hit jobs and put solar PV out of reach for many middle-class households seeking relief from soaring power bills.
“People refer to this as the solar-coaster ride,” Mr Grimes said. “Our standing joke is that a day is a long time in solar policy.”
The acceleration of the rebate reduction comes as the government is under increasing pressure from the power industry to modify its 20 per cent renewable energy target (RET).
Current projections suggest renewable energy supplies will exceed the goal of a 20 per cent share of total supply by 2020.
Renewable energy advocates warn that tinkering with the target would place at risk as much as $18 billion in additional investment in solar, wind and other non-fossil-fuel energy sources by the end of the decade.
Ric Brazzale, president of the REC Agents Association, said solar PV installations were on course to drop from 350,000 in both 2011 and 2012, to 230,000 in 2013 as state feed-in tariffs were wound back. That fall is now likely to accelerate, he said.
‘‘The industry is desperate for some policy stability,’’ Mr Brazzale said.
The renewable energy industry has been building a critical mass in terms of scale and innovation capacity that is now at risk: ‘‘It’s just so wasteful to risk throwing it away.’’
Mr Grimes said solar PV prices had been falling fast because of a flood of low-cost production from China, but the reductions may not continue as the Chinese industry consolidates and loss-making firms go bust. Some 15,000 people are employed in the industry, he said.
But Rheem, Australia’s largest producer of solar hot water systems, welcomed the announcement, saying it would ”create a level-playing field for all solar hot water producers”.
The renewable industry’s peak lobby group, the Clean Energy Council, said today’s decision should “erode all arguments” for further changes to the RET.
‘‘We would have expected the government to have more regard for the sense of investor uncertainty today’s announcement creates, right at the time when both major parties are seeking to demonstrate that Australia is a reliable place in which to invest, with stable and consistent market rules,’’ Russell Marsh, the council’s policy director, said.
“While it is appropriate that governments continue to review the level of incentives, it’s important that this is handled carefully and timed sensibly,” Mr Marsh said.
The way electricity prices are surging, there should be some high-voltage returns from power companies.
Well, you’d think so.
But the generators are struggling with – you’re not going to believe this – falling wholesale prices.
So it must be further down the wires where the money is being made.
How about the companies that bill you, then? A few are listed: Australian Power and Gas , ERM Business Energy and Infratil.
But on their recent form it can’t be them, either. One runs at a loss and the already modest profit of the other two is falling.
They’re getting their power supply more cheaply except there’s, uh, a leakage. Thanks to ferocious competition for customers, what they gain on the swings, they lose on the roundabout.
NOTE THE NETWORKS
That leaves the network – the companies with the transmission towers and wires strung from them – and there’s the rub.
Most of them aren’t in private hands, but are government owned. Bummer.
The only listed stock that is mostly an electricity network supplier is SP AusNet, although it also sells gas.
It’s the biggest holding of fund manager Allan Gray, but even that’s due to the dividend, not the prospect of a price surge.
Yielding 7.7 per cent, it comes with a small tax break as it’s one-third franked.
So if you bought the stock at its current price, the pre-tax yield would be about 8.7 per cent – way above what you’d get on a term deposit.
“It’s a stable, basic business that does nothing fancy. It seems to do quite well,” Allan Gray’s Simon Marais says.
A senior analyst at Morningstar, Adrian Atkins, says SP AusNet “looks modestly undervalued”.
One reason it’s been marked down is litigation over the 2009 Victorian bushfires, which will probably be covered by insurance but might not be counted by the regulator in setting its return. As you’ll see, rules and regulations for the electricity industry are in a world of their own, with often bizarre consequences.
PROBING THE GIANTS
No, the real money is in the two network giants of Origin Energy and AGL Energy, and running an electricity network isn’t even their biggest business.
They operate under some very odd rules set by the states that control how much they can earn. Or, at least, they are supposed to.
One idiosyncrasy is that lower interest rates should cut profits in the view of the regulator. This is by stint of a revenue allowance based on how much they’ll be spending. So lower interest requires less revenue. Get it?
Naturally, the way around regulations that penalise lower costs is to erect more towers and wires so more revenue is needed and so a higher tariff becomes essential. Should you ever get up close to one of those towers, not that I recommend you try, let me know if it’s gold-plated with platinum wires.
There are more than 1300 pages of rules, the 51st version in six years, set by a Beijing-sounding Standing Council on Energy and Resources along with separate state and federal regulators who would only agree what day it was purely by coincidence.
Not even the banks have their return regulated, as you’ve probably noticed.
THOSE PESKY PRICES
A plethora of government reports and inquiries, along with mounting pressure from politicians, suggests the rules are going to change eventually, though goodness knows in which direction.
‘The challenge will be the massive asset base they work with,” the chief executive at Lincoln Indicators’, Elio D’Amato, warns.
As the biggest power supplier, Origin Energy is loved by super funds because it does everything from producing gas and electricity to connecting customers.
Here’s the bad news. The shares have slumped to a five-year low on a forecast fall of 10 per cent in its underlying profit for 2012-13 after Queensland played hard ball over power prices.
If you’ve got your head around falling wholesale but rising retail power prices, you’re ready for what’s next. If you haven’t, just try to keep up.
It turns out that rising retail prices aren’t good for the power companies.
The reason is that demand falls as a result, and selling power is all about volume. In fact, demand has been falling for a few years, due to rooftop solar panels, the dollar gutting manufacturing and miners generating their own power.
Oh, and because of the higher prices, turning the airconditioner down does wonders for the household’s cash flow.
So the more politicians control electricity price rises, the better for Origin and AGL.