Regulator credits renewables for continuing fall in electricity prices

The Australian Energy Regulator (AER) has released its draft determination for the Default Market Offer (DMO) 2021-2022, and it is good news for consumers, especially if you live in New South Wales, south-east Queensland (QLD) and South Australia (SA). The good news is that electricity prices are set to fall, and not only that, but they now seem to be falling continuously, as if they’d fallen down the stairs in an M. C. Escher lithograph.

The DMO, which was introduced in 2019, is a reference price for consumers to compare against retail electricity contracts and also caps the price retailers can charge consumers on a standing offer contract. The DMO 2021-22 will see a reduction in electricity prices as compared to DMO 2020-21 of between 4.6% and 7.9% for residential customers (region dependent) and between 4.1% and 8.5% for small business consumers (also region dependent).

To proffer an example, if you’re one of the 60,000 South Australians on legacy – or standing offers, the savings for average customers in 2021-22 could total as much as $117 for residential consumers as compared to the year previous, and $342 if you’re one of the more than 10,000 small businesses.

“Since the introduction of the DMO in 2019, residential and small business standing offer consumers have seen their yearly bills reduce by hundreds of dollars,” said AER Chair Clare Savage, “We have also seen retailer competition remain steady.”

“It’s also critical for consumers to remember the DMO is intended as a safety net for those who don’t or can’t shop around and it’s not designed to be the most competitive deal,” continued Savage. “Most retailers have cheaper energy deals on offer, so shopping around remains the best way to get the best price.”

South Australian Minister for Energy and Mining, Dan van Holst Pellekaan, said the draft DMO continues the good work, which has seen electricity bills fall by $111 since the middle of 2020. Moreover, Pellekaan added that more savings are on the horizon, particularly with the development of the SA-NSW interconnector, which has been “modelled to deliver an additional $100 cut to power bills for households”.

According to the AER, the main factor driving these decreasing prices is the “continued strong investments in renewable generation” which is changing the shape of load profiles and reducing wholesale energy costs. AER’s draft also found that the “median effective price paid by customers with solar systems was around 24% lower than non-soar customers in DMO regions and Victoria.”

The draft DMO prices for 1 July 2021 to 30 June 2022 is no open for public submissions until 18 March.