Yesterday the Australian Energy Regulator increased the “default market offers” that apply to electricity retailers in New South Wales, South Australia, Queensland by 8% to 18%, depending on type of tariffs and location.

The day before, Victoria’s Essential Services Commission announced the default offer for Victorian consumers will increase by 1% to 5%, depending on tariff type and location.

These increases point to very serious issues within Australia’s electricity market. We may be in the early stages of an energy price shock comparable to the 1973 oil price crisis.

Fossil fuel costs are spiking
First, let’s summarise why retail electricity prices are rising. In short, the cost of generating power from coal or gas – which accounts about 70% of the electricity Australians consume – is soaring due to international events.

The short-term market price of black coal (used for about 70% of coal-fired generation) is now about five times higher than its long-run (ten year) average. One coal miner, New Hope Coal, says these are “record highs

Similarly the short-term price of gas has risen to levels never seen before in Australia – about four times its long-run average.

These price hikes have driven the prices in wholesale electricity markets to extraordinary levels. For example, the average wholesale price in the southern and eastern states in the period since April 10 (when the 2022 federal election was called) and yesterday has increased by 409% compared to the same period last year ($346 per megawatt-hour (MWh) versus $68 per MWh).

These wholesale prices flow through to the “offers” that retailers make to customers.

Read more - https://theconversation.com/expect-more-power-price-hikes-a-1970s-style-energy-shock-is-on-the-cards-183911