Energy customers have been facing bill debt across most jurisdictions since mid-2022 despite better outcomes in 2023, according to the energy regulator.
The Australian Energy Regulator’s (AER) latest ‘State of the energy market’ report (pdf), published on Oct. 5, revealed pressures remain in the energy system amid the net zero transition, with the need to “address energy affordability for consumers.”
About 52 percent of households are more concerned about energy affordability than a year ago.
Estimated electricity bills are rising between 9 percent and 20 percent in all jurisdictions, impacting households that are already experiencing broader cost-of-living pressures. Low-income consumers felt a higher cost burden at least double that of average-income earners.
Further, consumers faced similar costs for network services in 2023 compared to 2022, but electricity consumers faced longer and more frequent unplanned interruptions due mainly to significant weather events. At the same time, gas consumers continued to experience very few outages.
However, average wholesale electricity prices were significantly lower than record highs in 2022 and wholesale gas prices declined substantially, although it remains high compared to historical standards.
AER Chair Clare Savage said milder winter temperatures, improved generation availability, government coal and gas interventions, and energy bill subsidies helped better market outcomes this year. Consumer energy resources such as rooftop solar and small-scale batteries could help consumer affordability.
Further, she said the report highlighted the energy regulator’s critical work to ensure regulatory frameworks are flexible and responsive to the shifting market to help consumers become “better off now and in the future.”
“With consumers front of mind, we’re also looking ahead to ‘game changer’ reforms to identify consumers experiencing vulnerability early, get them the support they need to improve outcomes, and better share the costs and risks of vulnerability more equitably across the energy sector,” she said.
Meanwhile, rooftop solar output accounted for 9 percent of total generation in 2022, a 15 percent increase compared to 2021 and more than double that in 2018.
Rooftop solar output reduced grid demand during the middle of the day, with a new record for negative prices set for the fourth consecutive financial year.
Urgent Investment Needed, Energy Market Operator Says
Consumers’ rooftop solar, batteries, and electric vehicles actively participating in the power system could further reduce reliability risks predicted due to hotter and drier conditions, according to the Australian Energy Market Operator (AEMO).However, ongoing investment is needed to maintain energy reliability, AEMO said after it released its 2023 Electricity Statement of Opportunities (ESOO) report on Aug. 31. This 10-year reliability outlook signals development needs for each state.
AEMO CEO Daniel Westerman said planned investments in transmission, generation, and storage projects are critical to ensure Australian consumers continue to have access to reliable electricity supplies.
“Over the 10-year outlook, we continue to forecast reliability gaps, mostly due to the expectation that 62 percent of today’s coal fleet will retire by 2033,” Mr. Westerman said, adding that coal-fired generation reliability was predicted to plummet to historic lows.
Over the same 10-year period, electricity consumption, peak demand, transportation, and residential heating and cooking are predicted to grow due to population growth and economic activity.
“Federal and state government initiatives, including transmission projects identified in the Integrated System Plan, and mechanisms delivering firming capacity, such as the Commonwealth’s Capacity Investment Scheme, can address many identified risks over most of the 10-year horizon if delivered to schedule,” Mr. Westerman said.
Electricity demand is expected to increase due to the hotter and drier weather forecasted for the upcoming summer season.
“The entire industry is focused on managing the risks in the summer ahead, particularly during high-demand periods coupled with generation outages and low renewable output, but some risk will remain,” Mr. Westerman said.
Albanese Government Action Is Strengthening the Energy Grid: Minister
Climate Change and Energy Minister Chris Bowen said those government initiatives were “more important than ever.” He added that the report was “nothing new,” with the previous five also flagging supply concerns, heightened risks from coal outages and the need to incentivise continued supply.Mr. Bowen said the report showed how “sensible government policies can bring on new investment,” and the Albanese government is acting with pace to deliver them.
“After a decade of energy policy chaos, the Albanese government is implementing overdue policy reform to deliver a cheaper, cleaner, more reliable energy system,” he said.
“The latest ESOO confirms our federal government programs, including Rewiring the Nation and the Capacity Investment Scheme, will improve the strength of the grid and reduce reliability risks.
Further, Treasurer Jim Chalmers said, “Australians are under the pump right now,” but that the $14.6 billion cost‑of‑living plan would help with power bills and support vulnerable Australians.
In May, he announced $3 billion in direct energy bill relief for eligible households and small businesses, and that more than five million households would have up to $500 deducted from their power bills in the next financial year.
“Because of our policies, electricity price increases are expected to be around 25 percentage points less than what was projected—and 16 percentage points less for gas,” he said.
