With energy prices on the rise, more and more people are trying to cut costs when it comes to their electricity bills.
The cost of wholesale electricity prices rose by more than 130%, according to an energy report from the Melbourne-based think tank, The Grattan Institute. In 2015, generators’ revenues averaged $44.7 for every megawatt hour of electricity sold. This leaped to $102.1 in 2017, translating to a 20% rise in household electricity bills in 2017 alone.
Most will feel the pinch, but the rising cost of electricity severely affects vulnerable groups like the elderly and disabled the most. High costs prevent these individuals from being able to afford a warm home, which is linked to significant health risks.
So, what caused the mammoth price jump in the electricity market?
According to the report, there were 3 main factors:
- Reduced supply: The recent shutdown of coal-powered, low-cost power stations account for approximately 60% of the price jump. These plants were cheap to generate electricity but was ultimately economically unviable due to its snowballing maintenance cost, not to mention the environmental impact of burning brown and black coal.
- Rising materials cost: The rising cost of resources used powers generators also contributed to almost 40% of the price jump, such as the rising cost of gas and black coal. In combination with less supply from plant shutdowns, this placed upward pressure on wholesale prices
- Generators gaming the system: There is evidence of generators that ‘game’ the system by creating artificial supply shortages. Due to the concentration of the state electricity supply (most supply accounted for by only a few generators), an ‘interruption’ from one plant significantly affects supply to that state, forcing market prices to spike temporarily.
Unfortunately, these prices are expected to be the ‘new normal’, according to the report. These changes in price resulted (mostly) from natural market changes and are generally outside of the government’s control. As the market responds to the rising wholesale prices, new investments into better, cheaper and cleaner generators will occur down the line.
But what can we do about our own electricity bills?
Here are some strategies for you to reduce your own bill in the face of the ‘new normal’ prices:
- Increase household efficiency: This no-brainer strategy is one that is easy to understand, but hard to implement. You can reduce your consumption significantly by changing a few habits and installing simple efficiency upgrades in your home or business. We’ve even made a comprehensive guide to help you make any aspect of your home bill-saving and energy efficient.
- Switch retailers: There are many tools online to help you compare retailers for the best energy deals such as Energy Made Easy, which is run by the Federal Government. Currently, the Victorian government is giving $50 to those who use their comparison website, without any obligation to switch over until the end of December 2018.
- Get renewable energy and battery: Getting renewable upgrades like solar PV is a cost-effective and environmentally friendly way to cut down on energy costs, especially 5 to 10 years down the line. A battery helps you use generated electricity during periods of low or no generation, such as during the night for PV solar.
- Be smart about energy – it’s not very effective to try and reduce energy consumption when you don’t know what they are. Find out how much electricity you use with an energy management system. carbonTRACK creates accountability for your energy retailers by capturing your property’s energy profile such as usage, solar generation and solar export, as well as scheduling appliances to turn on and off to reduce wasted electricity.