AEMC

AEMC Residential electricity price trends 2018

Electricity prices falling overall with variation between states and territories

The Australian Energy Market Commission (AEMC) releases an annual report on what’s driving costs up and down across the electricity supply chain.

Most Australians can expect to see falling electricity prices over the next two years. The pressure is coming off prices because a huge pipeline of new renewable generation is coming into the market, and demand is relatively flat.

While the overall trend is down there are differences across the states and territories as a result of local factors impacting different parts of the supply chain.

The challenge going forward is to continue balancing supply and demand across the nation as the energy sector restructures. Network poles and wires account for up to half of consumer bills, depending on where you live. Managing the costs of connecting new generation will be a major challenge.

We can contain prices if we contain costs. We must stop over-engineered solutions to avoid gold-plating and price spikes.

This is the ninth price trends report. It provides a clear picture of how market and policy decisions have affected consumer prices for the best part of a decade. It provides the transparency governments need to understand whether price changes proposed by retailers are consistent with changes in underlying costs – so price rises can be understood before they happen. It provides context for policy makers to understand how decisions being considered now are likely to affect prices in the future.

The big picture on what’s driving prices

The single biggest driver of price in the next two years will be structural change in the wholesale generation sector.

Demand is relatively flat so wholesale costs are being driven lower by increased supply from renewables.

Direct costs associated with the large-scale renewable energy target (LRET) are expected to decrease over the next two years as the LRET target for 2020 is expected to be met through the large volume of new renewables. As a result the price of large-scale generation certificates is expected to fall significantly in coming years.

The small-scale renewable energy scheme (SRES) is driving upward pressure on prices nationally in response to strong growth in take-up of solar PV and other technologies like solar hot water, small scale wind systems and source heat pumps.

The changing generation mix is affecting the amount and type of investment needed right across the power system.

Networks already account for around half of consumer bills and managing the costs of connecting new generation will be a major challenge. We must have appropriate checks and balances in place to avoid network solutions that leave customers paying more than necessary.

Visit the AEMC project page
Resources & downloads

The national and jurisdictional picture

In this section you can view a breakdown of the overall electricity cost components at a national and jurisdictional level. Select the area that you are interested in below, and choose to view via bills ($/year) or prices (c/kWh):

c/kwh

2017/18

2018/19

2019/20

2020/21

Residual

3.57

2.72

2.79

2.87

Environmental policies

1.75

2.08

2.07

2.14

LRET - LGC cost

0.82

0.89

0.78

0.79

SRES - STC cost

0.43

0.69

0.74

0.77

FIT Schemes

0.36

0.35

0.37

0.39

Other state schemes

0.14

0.15

0.18

0.19

Regulated Networks

13.22

13.33

13.49

13.65

Transmission

2.19

2.22

2.28

2.35

Distribution

10.04

10.10

10.24

10.32

Metering

0.99

1.01

0.97

0.98

Wholesale

11.70

11.72

10.34

10.55

Total

30.24

29.85

28.69

29.20

$/year

2017/18

2018/19

2019/20

2020/21

Residual

$162

$125

$128

$132

Environmental policies

$79

$95

$96

$99

LRET - LGC cost

$37

$41

$36

$37

SRES - STC cost

$19

$32

$34

$36

FIT Schemes

$17

$16

$17

$18

Other state schemes

$6

$7

$8

$8

Regulated Networks

$605

$610

$617

$625

Transmission

$100

$101

$104

$107

Distribution

$462

$464

$470

$475

Metering

$44

$45

$43

$43

Wholesale

$536

$537

$474

$482

Total

$1,384

$1,367

$1,315

$1,338

National

The terms of reference for this review require the calculation of indicative national prices and cost components.

As the national numbers are an average of jurisdictional results that are, in some cases, already averages of multiple different network regions, the prices and costs are indicative only and may not reflect the actual costs faced by residential consumers.

In order to calculate the national weighted average consumption level and national weighted average prices, the representative consumption level and the estimate of prices used for each jurisdiction has been weighted by the number of residential connections in each jurisdiction. The national weighted average consumption is 4,596 kWh of electricity per year.

As a result, the trends in the national summary most closely reflect the cost trends in the most populous jurisdictions. This also means that the national summary is more representative of trends in the National Electricity Market (NEM) that covers the eastern states.

A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

Trends in residential electricity prices and bills

In 2017-18, the national weighted average electricity bill for the representative consumer was approximately $1,384 exclusive of GST. This was made up of a:

  • 44% regulated network component
  • 39% wholesale market component
  • 6% environmental policy component
  • 12% residual component.

The national weighted average residential electricity bill:

  • decreased 1.3% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 1.1% from 2018-19 to 2020-21 based on:
    • a decrease of 3.9% in 2019-20
    • an increase of 1.8% in 2020-21.

The expected decrease in residential electricity prices from 2018-19 to 2020-21 are largely attributable to decreases in the wholesale cost component.

Trends in electricity supply chain components

The below chart shows the expected trends in national supply chain components from 2017-18 to 2020-21.

Wholesale electricity costs

Wholesale electricity costs comprised approximately 39% of the representative national average electricity bill in 2017-18, and are expected to account for a decreasing proportion of a residential consumer's bill from 2017-18 to 2020-21.

On a national basis, wholesale electricity costs:

  • increased 0.1% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 5.1% from 2018-19 to 2020-21 based on:
    • a decrease of 11.8% in 2019-20
    • an increase of 2% in 2020-21.

Regulated network costs

Regulated network costs comprised approximately 44% of the representative national average electricity bill in 2017-18, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2017-18 to 2020-21.

On a national basis, regulated network costs:

  • increased 0.9% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.2% from 2018-19 to 2020-21. This is based on an increase of:
    • 1.2% in 2019-2
    • 1.2% in 2020-21.

The increase in network costs is driven by increasing distribution and transmission costs.

Environmental policy costs

The environmental policy costs that are relevant for the national summary from 2017-18 to 2020-21 are environmental schemes which have a direct cost that can be included on a customer's retail bill. This includes costs associated with the Commonwealth Government's Renewable Energy Target (RET), jurisdictional feed-in-tariff (FiT) schemes and jurisdictional energy efficiency schemes.

Environmental policy costs comprised approximately 6% of the representative national average electricity bill in 2017-18, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2017-18 to 2020-21.

On a national basis, environmental policy costs:

  • increased 19% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.4% from 2018-19 to 2020-21. This is based on:
    • a decrease of 0.7% in 2019-20
    • an increase of 3.5% in 2020-21.

The increase in environmental policy costs is primarily due to increasing small-scale renewable energy scheme (SRES) costs.

The national representative consumer

The terms of reference for the review require the calculation of indicative national prices and cost components.

As the national numbers are an average of jurisdictional results that are, in some cases, already averages of multiple different network regions, the prices and costs are indicative only and may not reflect the actual costs faced by residential consumers.

In order to calculate the national weighted average consumption level and national weighted average prices, the representative consumption level and the estimate of prices used for each jurisdiction has been weighted by the number of residential connections in each jurisdiction. The national weighted average consumption is 4,596 kWh of electricity per year.

As a result, the trends in the national summary most closely reflect the cost trends in the most populous jurisdictions. This also means that the national summary is more representative of trends in the National Electricity Market (NEM) that covers the eastern states.

A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

c/kwh2017/182018/192019/202020/21
Environmental policies3.293.054.194.61
LRET - LGC cost0.650.750.850.90
SRES - STC cost0.330.640.710.72
Feed-in Tariff Schemes1.901.252.222.57
EEIS0.420.410.410.41
Regulated networks7.188.088.328.89
Transmission1.061.591.691.82
Distribution5.535.885.996.37
ACS Metering0.590.600.640.69
Wholesale9.9411.639.9210.40
Residual3.261.261.291.32
Standing Offer23.6824.0123.7225.22
$/year2017/182018/192019/202020/21
Environmental policies$236$218$300$330
LRET - LGC cost$46$53$61$65
SRES - STC cost$24$45$51$52
Feed-in Tariff Schemes$136$89$159$184
EEIS$30$29$29$29
Regulated networks$514$578$595$636
Transmission$76$114$121$130
Distribution$395$421$428$456
ACS Metering$42$43$46$49
Wholesale$711$832$709$744
Residual$233$90$92$95
Standing Offer$1,693$1,717$1,697$1,804

ACT

Power prices are estimated to rise slightly in the ACT by $87 over the next two years because of rising environmental scheme costs and network costs. 68% of residential electricity consumers are still on standing offers. If they have not shopped around they’re missing out on current savings of $286 between the best competitive market offer and the lowest standing offer.

Trends in residential electricity prices and bills

In 2017-18, the residential electricity standing offerbill in the ACT was approximately $1,693 excluding GST. This is made up of a:

  • 42% wholesale market cost component
  • 30.3% regulated network cost component
  • 13.9% environmental policy cost component
  • 13.8% residual component.

In 2017-18, the representative consumer on a market offerhad an annual bill of $1,548 exclusive of GST.

Residential electricity standing offer prices for the representative consumer in the ACT:

  • increased by 1.4% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 2.5% from 2018-19 to 2020-21 based on:
    • a decrease of 1.2%  in 2019-20
    • an increase of 6.3% in 2020-21.

The expected increase in residential standing offer electricity bills from 2018-19 to 2020-21 is driven by increasing network costs and environmental costs.

Trends in electricity supply chain components

The chart below shows the expected trends in supply chain components in the ACT from 2017-18 to 2020-21.

Wholesale electricity costs

Wholesale electricity costs comprised approximately 42% of the representative standing electricity offer in 2017-18, and is expected to account for a decreasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Wholesale electricity costs:

  • increased by 17% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 5.4% from 2018-19 to 2020-21 based on:
    • a decrease of 14.7% in 2019-20
    • an increase of 4.9% in 2020-21.

Regulated network costs

In the ACT, transmission network services are provided by Transgrid and distribution network services are provided EvoEnergy.

Regulated network costs comprised approximately 30.3% of the representative standing electricity offer in 2017-18, and is expected to account for an increasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Regulated network costs:

  • increased by 12.5% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 4.9% from 2018-19 to 2020-21. This is based on an increase of:
    • 3.0% in 2019-20
    • 3.8% in 2020-21.

The increase in network costs is primarily driven by increasing distribution and transmission costs. 

Environmental policy costs

The environmental policy costs relevant in the ACT during 2017-18 to 2020-21 are the Commonwealth Government's Renewable Energy Target (RET) and the ACT Government's feed-in-tariffs (FiT) schemes and the Energy Efficiency Improvement Scheme (EEIS).

In 2017-18, environmental schemes comprised 13.9% of the representative standing offer and are expected to comprise an increasing proportion of a representative consumer's electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • decreased by 7.6% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 23.1% from 2018-19 to 2020-21 based on an increase of:
    • 37.7% in 2019-20
    • 10% in 2020-21.

The increase in environmental costs is primarily driven by increasing ACT FiT scheme costs, and to a lesser extent by the Commonwealth RET schemes. 

The representative consumer in the ACT

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In the ACT the representative consumer:

  • is a two-person household that consumes 7,151 kWh of electricity per year
  • is not on a "controlled load" tariff
  • has no mains gas connection
  • is on a regulated standing offer.

As at March 2018, 68% of ACT small customers are on a standing offer and therefore the representative consumer is on a standing offer. A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology report.

c/kwh

2017/18

2018/19

2019/20

2020/21

Environmental policies

1.67

1.99

2.02

2.05

LRET - LGC cost

0.74

0.83

0.78

0.82

SRES - STC cost

0.34

0.65

0.73

0.74

Climate Change Fund

0.41

0.34

0.33

0.32

Energy Saving Scheme

0.17

0.17

0.18

0.18

Regulated networks

14.23

14.40

14.47

14.73

Transmission

3.03

3.15

3.27

3.42

Distribution

10.54

10.59

10.59

10.71

ACS Metering

0.65

0.66

0.61

0.61

Wholesale

9.93

11.68

9.92

10.50

Residual

4.77

2.64

2.71

2.78

Market Offer

30.59

30.71

29.12

30.06

$/year

2017/18

2018/19

2019/20

2020/21

Environmental policies

$70

$84

$85

$87

LRET - LGC cost

$31

$35

$33

$34

SRES - STC cost

$14

$27

$31

$31

Climate Change Fund

$17

$14

$14

$14

Energy Saving Scheme

$7

$7

$7

$7

Regulated networks

$600

$607

$610

$621

Transmission

$128

$133

$138

$144

Distribution

$444

$446

$446

$451

ACS Metering

$27

$28

$26

$26

Wholesale

$418

$492

$418

$442

Residual

$201

$111

$114

$117

Market Offer

$1,290

$1,294

$1,227

$1,267

New South Wales

Power prices are estimated to fall in NSW over the next two years in response to rising renewable generation capacity. Representative consumers could be paying around $27 less by July 2020 than they are today. And this year consumers who are still on standing offers could save $293 by switching to the best competitive market offer available.

Trends in residential electricity prices and bills

In 2017-18, a residential electricity market offerbill in New South Wales was approximately $1,290 exclusive of GST. This is made up of a:

  • 32.4% wholesale market cost component
  • 46.5% regulated network cost component
  • 5.5% environmental policy cost component
  • 15.6% residual component.

In 2017-18, a representative consumer on a residential standing offerusing 4,215 kWh each year had an annual bill of $1,578 exclusive of GST. 

Residential electricity market offer bills for the representative consumer in New South Wales:

  • increased by 0.4% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 1.1% from 2018-19 to 2020-21 based on:
    • a decrease of 5.2% in 2019-20
    • an increase of 3.2% in 2020-21.

The expected decrease in residential market offer electricity prices from 2018-19 and 2020-21 is largely attributable to a decrease in the wholesale cost component.

Trends in electricity supply chain components

The electricity prices and bills are based on a weighted average of retailer's lowest market offers for the representative consumer in New South Wales.

The chart below shows the expected trends in supply chain components in New South Wales from 2017-18 to 2020-21.

Trends in NSW supply chain components

Wholesale electricity costs

Wholesale electricity costs comprised approximately 32.4% of the representative market electricity offer in 2017-18, and are expected to account for a decreasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Wholesale electricity costs:

  • increased by 17.7% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 5.2% from 2018-19 to 2020-21 based on:
    • a decrease of 15.1% in 2019-20
    • an increase of 5.8% in 2020-21.

Regulated network costs

In New South Wales, transmission network services are provided by Transgrid and distribution network services are provided Ausgrid, Endeavour Energy and Essential Energy.

Regulated network costs comprised approximately 46.5% of the representative market electricity offer in 2017-18, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Regulated network costs:

  • increased by 1.2% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.2% from 2018-19 to 2020-21 based on an increase of:
    • 0.5% in 2019-20
    • 1.8% in 2020-21.

The main driver of this cost trend is the increase in transmission network charges.

Environmental policy costs 

The environmental policy costs that are relevant in New South Wales during the 2017-18 to 2020-21 are the Commonwealth Government's Renewable Energy Target (RET), and the New South Wales Government's Climate Change Fund (CCF) and Energy Savings Scheme (ESS).

In 2017-18, environmental schemes comprised 5.5% of the representative market offer and are expected to represent an increasing proportion of a representative consumer's electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • increased by 19.2% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.6% from 2018-19 to 2020-21 based on an increase of:
    • 1.3% in 2019-20
    • 1.9% in 2020-21.

The main driver of these trends is the significant increase in the cost of the Commonwealth government's small-scale renewable energy scheme (SRES).

The representative consumer in New South Wales

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In New South Wales the representative consumer:

  • is a two-person household that consumes 4,215 kWh of electricity per year
  • is not on a "controlled load" tariff
  • has a mains gas connection, and therefore is a dual fuel customer
  • is on a market offer.

As at March 2018, 83% of small customers in New South Wales are on a market offer and therefore the representative consumer is on a market offer. A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology report.

*The residential price paid by the representative consumer in the Northern Territory is less than the sum of the cost components (which includes the cost of environmental policies, regulated networks and wholesale electricity) in the chart. This is due to the cost differential (that is, the residential electricity price is subsidised).

c/kwh2017/182018/192019/202020/21
Environmental policies0.931.331.501.56
LRET - LGC cost0.590.690.790.84
SRES - STC cost0.330.640.710.72
Regulated networks12.8713.4013.4013.40
Transmission0.000.000.000.00
Distribution12.8713.4013.4013.40
ACS Metering0.000.000.000.00
Wholesale14.6914.8414.9915.24
Cost differential-2.61-3.41-3.47-3.33
Residential Price 25.8826.1626.4226.87
$/year2017/182018/192019/202020/21
Environmental policies$61$88$99$103
LRET - LGC cost$39$46$52$55
SRES - STC cost$22$42$47$48
Regulated networks$851$886$886$886
Transmission$0$0$0$0
Distribution$851$886$886$886
ACS Metering$0$0$0$0
Wholesale$971$981$991$1,008
Cost differential-$173-$225-$229-$220
Residential Price $1,711$1,730$1,747$1,777

Northern Territory

Power prices are expected to rise slightly in the Northern Territory in line with the price path set by the Northern Territory government. Prices don’t reflect the cost of supply in this vast territory of relatively small, scattered communities. Representative consumers could be paying around $47 more in July 2020 than they are today.

Trends in residential electricity prices and bills

Residential electricity prices in the Northern Territory are set by the Northern Territory Government, which subsidises electricity prices so that the prices paid by consumers are less than the cost of supply.

In 2017-18, the representative consumer had an annual bill of $1,711 exclusive of GST. This is made up of (excluding residual-retail component):

  • 56.8% wholesale electricity cost component
  • 49.7% regulated network cost component
  • 3.6% environmental policy cost component.​ It is noted that the sum of the supply chain cost components in the Northern Territory add up to more than 100% due to the negative cost differential (that is, the residential electricity price is being subsidised].

Residential electricity prices for the representative consumer in the Northern Territory:

  • increased by 1.1% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.3% from 2018-19 to 2020-21 based on an:
    • increase of 1% in 2019-20
    • increase of 1.7% in 2020-21.

The expected increases in residential electricity prices in 2019-20 and 2020-21 are attributable to the annual increase projected by the Northern Territory Government.

Trends in electricity supply chain components

The below chart shows the expected trends in supply chain cost components in the Northern Territory from 2017-18 to 2020-21.

Wholesale electricity costs

Wholesale electricity costs for 2017-18 to 2020-21 were provided to the AEMC by the Northern Territory Government.

Wholesale electricity costs comprised approximately 56.8% of the representative residential electricity bill in 2017-18, and are expected to account for a stable proportion of the representative residential electricity bill from 2018-19 to 2020-21.

Wholesale electricity costs:

  • increased by 1.0% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 1.3% from 2018-19 to 2020 based on an:
    • increase of 1.0% in 2019-20
    • increase of 1.7% in 2020-21.

Regulated networks costs

In the Northern Territory, transmission and distribution network services are provided by the government-owned Power and Water Corporation. There is also no distinction between transmission and distribution prices when network prices are recovered from consumers, which is different from other jurisdictions.

Regulated network costs comprised approximately 49.8% of the representative residential electricity bill in 2017-18, and are expected to account for an increasing proportion of the representative residential electricity bill from 2018-19 to 2020-21.

Regulated network costs:

  • increased by 4.1% from 2017-18 to 2018-19
  • are not expected to change from 2018-19 to 2020-21.

Environmental policy costs

The environmental policy cost that is relevant in the Northern Territory during 2017-18 to 2020-21 is the Commonwealth Government's Renewable Energy Target (RET).

In 2017-18, RET costs comprised 4% of the representative residential electricity bill and are expected to comprise an increasing proportion of the representative residential electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • increased by 42.9% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 8.5% from 2018-19 to 2020-21 based on an:
    • increase of 12.9% in 2019-20
    • increase of 4.3% in 2020-21.

The increase in environmental policy costs is driven by increasing costs associated with the Small-scale renewable energy scheme (SRES).

The representative consumer in the Northern Territory

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In the Northern Territory the representative consumer:

  • is a two-person household that consumes 6,613 kWh of electricity per year
  • has no mains gas connection
  • has air conditioning
  • is on the electricity price set by the Northern Territory Government.

The analysis in this report relates to the Darwin-Katherine power system. A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

c/kwh2017/182018/192019/202020/21
Environmental policies1.231.621.471.48
LRET - LGC cost0.880.950.720.72
SRES - STC cost0.350.670.750.76
Regulated networks13.1212.4012.2012.24
Transmission1.851.761.781.82
Distribution10.449.799.529.52
ACS Metering0.830.860.890.89
Wholesale11.058.886.646.56
Residual 3.724.304.404.51
Market Offer29.1327.2024.7124.80
Market Offer less Government Rebate28.1726.24

$/year2017/182018/192019/202020/21
Environmental policies$65$85$77$78
LRET - LGC cost$46$50$38$38
SRES - STC cost$18$35$39$40
Regulated networks$688$650$639$641
Transmission$97$92$93$95
Distribution$547$513$499$499
ACS Metering$44$45$47$47
Wholesale$579$465$348$344
Residual $195$225$231$237
Market Offer$1,526$1,425$1,295$1,299
Market Offer less Government Rebate$1,476$1,375

South east Queensland

South east Queensland consumers can expect falling prices over the next two years in response to rising renewable generation capacity - paying around $76 less by July 2020 than today. Almost 1 in 5 south east Queenslanders are on standing offers and could save money by shopping around. This year the representative consumer could save $254 between the best competitive market offer and the standing offer.

Trends in residential electricity prices and bills

In 2017/18, a residential electricity market offer bill in South east Queensland was approximately $1,526 exclusive of GST, which equates to a revised customer bill of $1,476 after removal of the Queensland government rebate of $50. The market offer was made up of the following components:

  • 38% wholesale market costs
  • 45% regulated network costs
  • 2% environmental policy costs
  • 8% residual component.

In 2017/18, a representative consumer on a standing offer had an annual bill of $1,699 exclusive of GST, which equates to a revised customer bill of $1,649 after the Queensland Government rebate of $50.

Residential electricity market offer bills for the representative consumer in south east Queensland (exclusive of the $50 rebate):

  • decreased by 6.8% from 2017/18 to 2018/19
  • are expected to decrease by an annual average of 2.8% from 2018/19 to 2020/21. This is based on:
    • a decrease of 5.8% in 2019/20
    • an increase of 0.3% in 2020/21.

The expected decrease in residential market offer electricity prices in 2019/20 is largely attributable to decreases in the wholesale component.

Trends in electricity supply chain components

Electricity supply chain components include wholesale market costs, regulated networks costs, environmental policy costs and the residual component. In addition, residential customers in Queensland received a $50 rebate in 2017/18 and 2018/19.

The below chart shows the expected trends in supply chain components in south east Queensland from 2017/18 to 2020/21.

Wholesale electricity costs

Wholesale electricity costs comprised approximately 38% of the representative market electricity offer in 2017/18, and are expected to account for a decreasing proportion of a residential electricity consumer’s bill from 2017/18 to 2020/21.

Wholesale electricity costs are expected to:

  • decrease by 19.7% from 2017/18 to 2018/19
  • decrease by an annual average of 14% from 2018/19 to 2020/21. This is based on:
    • a decrease of 25.2% in 2019/20
    • an increase of 1.2% in 2020/21.

Regulated network costs

In South East Queensland, transmission network services are provided by Powerlink and distribution network services are provided by Energex.

Regulated network costs comprised approximately 45% of the representative market electricity offer in 2017/18, and are expected to account for a decreasing proportion of a residential electricity consumer’s bill from 2017/18 to 2020/21. 

Regulated network costs are expected to:

  • decreased by 5.5% from 2017/18 to 2018/19
  • are expected to decrease by an annual average of 0.7% from 2018/19 to 2020/21. This is based on:
  • a decrease of 1.7% in 2019/20
  • an increase of 0.3% in 2020/21.

The main driver of this trend is the decrease in distribution network charges.

Environmental policy costs

The environmental policy cost that is relevant in south east Queensland during the reporting period is the The RET applies on a national basis and consists of the LRET and SRES.

In 2017/18, the RET comprised 4.2% of the representative market offer in south east Queensland and is expected to comprise a decreasing proportion of the representative consumers’ electricity bill from 2017/18 to 2020/21.

Environmental policy costs are expected to:

  • increased by 31.3% from 2017/18 to 2018/19
  • are expected to decrease by an annual average of 4.5% from 2018/19 to 2020/21.
  • This is based on:
    • a decrease of 9.4% in 2019/20
    • an increase of 0.8% in 2020/21. 

The main driver of this trend is the increase in the Commonwealth government’s SRES policy.

The representative consumer in South East Queensland

The uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In South East Queensland the representative consumer:

  • is a two-person household that consumes 5,240 kWh of electricity per year, of which 806 kWh is attributed to a controlled-load tariff
  • is on a “controlled load” tariff
  • has no gas connection
  • is on a market offer.

As at December 2017, 81% of small customers in South East Queensland were on a market offer and therefore the South East Queensland representative consumer is on a market offer. A detailed explanation of the pricing methodology is set out in the 2018 Key concepts and calculation methodology report.

$/year

2017/18

2018/19

2019/20

2020/21

Environmental policies

$125

$156

$153

$155

LRET - LGC cost

$42

$46

$40

$40

SRES - STC cost

$17

$33

$37

$37

Feed-in Tariff Schemes

$53

$64

$64

$64

REES

$13

$13

$13

$13

Regulated networks

$717

$763

$791

$795

Transmission

$145

$151

$155

$159

Distribution

$544

$581

$605

$605

ACS Metering

$29

$31

$30

$30

Wholesale

$848

$855

$754

$701

Residual

$199

$79

$81

$83

Market Offer

$1,889

$1,854

$1,779

$1,734

c/kwh

2017/18

2018/19

2019/20

2020/21

Environmental policies

2.50

3.13

3.07

3.10

LRET - LGC cost

0.84

0.93

0.79

0.81

SRES - STC cost

0.35

0.66

0.74

0.75

Feed-in Tariff Schemes

1.06

1.29

1.29

1.29

REES

0.25

0.25

0.25

0.25

Regulated networks

14.34

15.27

15.82

15.89

Transmission

2.89

3.02

3.11

3.18

Distribution

10.88

11.62

12.10

12.10

ACS Metering

0.57

0.62

0.61

0.61

Wholesale

16.96

17.11

15.07

14.03

Residual

3.98

1.57

1.61

1.65

Market Offer

37.78

37.07

35.57

34.67

South Australia

Power prices are estimated to fall in South Australia over the next two years in response to rising renewable generation capacity. Representative consumers should be paying around $120 less by July 2020 than they are today. Consumers who have not shopped around are missing out on current savings of $357 between the best competitive market offer and the lowest standing offer.

Trends in residential electricity prices and bills

In 2017-18, the representative residential electricity market offer bill​ in South Australia was approximately $1,889 exclusive of GST. This is made up of a:

  • 44.9% wholesale market cost component
  • 38.0% regulated network cost component
  • 6.6% environmental policy cost component
  • 10.5% residual component.

In 2017-18, the representative consumer on the residential electricity standing offer​ had an annual bill of $2,194 exclusive of GST.

Residential electricity market offer bills for the representative consumer in South Australia:

  • decreased by 1.9% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 3.3% from 2018-19 to 2020-21. This is based on a decrease of:
    • 4.1% in 2019-20
    • 2.5% in 2020-21.

The expected decreases in residential market offer electricity prices from 2018-19 and 2020-21 are largely attributable to decreases in the wholesale cost component.

Trends in electricity supply chain components

The below chart shows the expected trends in supply chain cost components in South Australia from 2017-18 to 2020-21.

Wholesale electricity costs

Wholesale electricity costs comprised approximately 45% of the representative electricity market offer in 2017-18, and is expected to account for a decreasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Wholesale electricity costs:

  • increased by 0.9% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 9.4% from 2018-19 to 2020-21 based on a decrease of:
    • 11.9% in 2019-20
    • 6.9% in 2020-21.

Regulated network costs

In South Australia, transmission network services are provided by ElectraNet and distribution network services are provided by SA Power Network.

Regulated network costs comprised approximately 38% of the representative electricity market offer in 2017-18, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Regulated network costs:

  • increased by 6.4% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 2.0% from 2018-19 to 2020-21 based on an increase of:
    • 3.6% in 2019-20
    • 0.5% in 2020-21.

The increase in network costs is driven by increases in both transmission and distribution network costs.

Environmental policy costs

The environmental policy costs that are relevant for South Australia during 2017-18 to 2020-21 are the Commonwealth Government's Renewable Energy Target (RET) and the South Australian Government's solar feed-in-tariff (FiT) schemes and the Retailer Energy Efficiency Scheme (REES).

In 2017-18, environmental schemes represented 6.6% of the representative market offer and are expected to account for an increasing proportion of a representative consumer's electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • increased by 25% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 0.5% from 2018-19 to 2020-21 based on:
    • a decrease of 1.9% in 2019-20
    • an increase of 1% in 2020-21.

The 25% increase in environmental costs from 2017-18 to 2018-19 is driven by increasing costs associated with the Commonwealth Government's Small-scale renewable energy scheme (SRES) and South Australian FiT schemes.

The representative consumer in South Australia

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In South Australia the representative consumer:

  • consumes 5,000 kWh of electricity per year
  • has no "controlled load" tariff
  • is on a market offer.

As at March 2018, 89% of South Australian small customers are on a market offer and therefore the representative consumer is on a market offer.  A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

c/kwh2017/182018/192019/202020/21
Environmental policies1.442.032.292.39
LRET - LGC cost0.911.061.201.29
SRES - STC cost0.520.971.091.11
Regulated networks10.7910.6410.7111.19
Transmission2.762.412.212.29
Distribution7.477.667.958.33
ACS Metering0.560.570.560.57
Wholesale8.948.557.287.00
Residual2.462.882.963.03
Standing Offer23.6224.1123.2423.61
$/year2017/182018/192019/202020/21
Environmental policies$114$161$181$189
LRET - LGC cost$72$84$95$102
SRES - STC cost$41$77$86$88
Regulated networks$853$841$847$885
Transmission$218$190$174$181
Distribution$591$606$629$659
ACS Metering$44$45$44$45
Wholesale$707$676$576$554
Residual$195$228$234$240
Standing Offer$1,868$1,906$1,838$1,867

Tasmania

The Tasmanian Government has established a cap for electricity price increases at the Hobart consumer price index (CPI) from 2017-2018 to 2020-2021. This capped the actual increase in the state’s retail price to 2.05% from 2017-2018 to 2018-2019.

The Tasmanian Government has not yet set prices for the next two years. They are expected to decrease slightly but this will be subject to changes in the energy sector that could happen between now and when prices are set for July 2019 and July 2020.

Trends in residential electricity prices and bills

In 2017-18, a representative consumer on the regulated standing offer using 7,908 kWh each year had an annual bill of $1,868 exclusive of GST. This is made up of a:

  • 37.8% wholesale market cost component
  • 45.7% regulated network cost component
  • 6.1% environmental policy cost component
  • 10.4% residual component.

Residential electricity standing offer bills for the representative consumer in Tasmania:

  • increased by 2.05% from 2017-18 to 2018-19
  • are expected to decrease by an annual average of 1.0% from 2018-19 to 2020-21 based on:
    • a decrease of 3.6% in 2019-20
    • an increase of 1.6% in 2020-21.

The expected decrease in residential standing offer electricity prices from 2018-19 to 2020-21 is largely attributable to a decrease in the wholesale cost component.

Trends in electricity supply chain components

Electricity supply chain components include wholesale market costs, regulated networks costs, environmental policy costs and the residual component.

The residual component is derived for 2017-18 and 2018-19 by subtracting wholesale, environmental and network costs from the standing offer price. The residual component is assumed to increase at an inflation rate of 2.5% for future years in the reporting period. The residual component is derived specifically for the representative consumer using the methodology in this report and is not equivalent to the regulated retail margin set by the TER in Tasmania.

The chart below shows the expected trends in supply chain cost components in Tasmania from 2017-18 to 2020-21.

Wholesale market costs

In Tasmania, wholesale market costs comprised approximately 37.8% of the representative standing offer in 2017-18, and are expected to comprise a decreasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

For 2017-18 and 2018-19, the wholesale price was/is set by the Wholesale Electricity Price Orderat:

  • $83.79/MWh for 2017-18
  • $79.68/MWh for 2018-19.

Regulated network costs

In Tasmania, transmission and distribution network services are provided by TasNetworks.

Regulated network costs comprised approximately 45.7% of the representative regulated electricity offer in 2017-18, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2018-19 to 2020-21.

Regulated network costs:

  • decreased by 1.4% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 2.5% from 2018-19 to 2020-21 based on an increase of:
    • 7% in 2019-20
    • 4% in 2020-21.

This increase in network costs is primarily driven by increasing distribution costs.

Environmental policy costs

The environmental policy cost that is relevant in Tasmania during the reporting period is the Commonwealth Government's Renewable Energy Target (RET).

In 2017-18, the RET represented 6.1% of the representative standing offer and are expected to account for an increasing proportion of a representative consumer's electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • increased by 41.6% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 8.5% from 2018-19 to 2020-21. This is based on an increase of:
    • 9% in 2019-20
    • 3% in 2020-21.

The main driver of these trends is the significant increase in the cost of the Commonwealth government's SRES policy.

Aurora Energy offers a number of feed-in-tariffs for small-scale renewable energy generators. However, the costs of these schemes have not been estimated as they do not directly affect residential prices.

The representative consumer in Tasmania

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In Tasmania the representative consumer:

  • is a two-person household that consumes 7,908 kWh of electricity per year, of which 4,349 kWh is attributed to tariff 41 (heating and hot water).
  • has no mains gas connection
  • has electric water heating
  • is on a regulated standing offer.

As at March 2018, most residential customers in Tasmania are on a standing offer and therefore the representative consumer is on a standing offer. A detailed explanation of the pricing methodology is set out in the 2018 Key concepts and calculation methodology report.

c/kwh2018201920202021
Environmental policies2.122.332.172.31
LRET - LGC cost0.950.970.710.69
SRES - STC cost0.630.750.730.82
Feed-in Tariff Schemes0.340.380.410.43
VEU0.190.230.320.37
Regulated networks11.7411.9812.1812.13
Transmission1.451.411.421.43
Distribution8.628.869.159.09
ACS Metering1.671.711.611.61
Wholesale12.8611.4110.3710.49
Residual 2.572.642.702.77
Market Offer29.2928.3527.4227.70

$/year2018201920202021
Environmental policies$82$90$84$89
LRET - LGC cost$37$37$28$27
SRES - STC cost$25$29$28$32
Feed-in Tariff Schemes$13$15$16$17
VEU$7$9$12$14
Regulated networks$454$463$471$469
Transmission$56$54$55$55
Distribution$333$342$354$351
ACS Metering$65$66$62$62
Wholesale$497$441$401$406
Residual $99$102$104$107
Market Offer$1,132$1,096$1,060$1,071

Victoria

Power prices are estimated to fall in Victoria over the next two years in response to rising renewable generation capacity. Representative consumers should be paying around $61 less by January 2021 than they are today. And this year consumers who are still on standing offers could save $465 by switching to the best competitive market offer available.

Trends in residential electricity prices and bills

In 2018, the residential electricity market offerannual bill in Victoria was approximately $1,132 exclusive of GST. This is made up of a:

  • 43.9% wholesale market cost component
  • 40.1% regulated network cost component
  • 7.2% environmental policy cost component
  • 8.8% residual component.

In 2018, a representative consumer on a standing offer had an annual bill of $1,597 exclusive of GST.

Residential electricity market offer prices for the representative consumer in Victoria are expected to decrease:

  • 2% from 2018 to 2019
  • by an annual average of 1.2% from 2019 to 2021 based on:
    • a decrease of 3.3% in 2020
    • an increase of 1.0% in 2021.

The expected decrease in residential electricity market offer prices from 2018-19 to 2020-21 is largely attributable to a decrease in the wholesale cost component.

Trends in electricity supply chain components

The chart below shows the expected trends in supply chain components in Victoria from 2017-18 to 2020-21.

Wholesale electricity costs

Wholesale electricity costs comprised approximately 43.9% of the representative electricity market offer in 2018, and are expected to account for a decreasing proportion of a residential electricity consumer's bill from 2019 to 2021.

Wholesale electricity costs:

  • decreased 11.3% from 2018 to 2019
  • are expected to decrease by an annual average of 4.1% from 2019 to 2021 based on:
    • a decrease of 9.1% in 2020
    • an increase of 1.2% in 2021.

Regulated network costs

In Victoria, transmission network services are provided by AusNet Services, and distribution network services are provided AusNet Services, Jemena, United Energy, CitiPower, and Powercor.

Regulated network costs comprised approximately 40.1% of the representative electricity market offer in 2018, and are expected to account for an increasing proportion of a residential electricity consumer's bill from 2019 to 2021.

Regulated network costs:

  • increased 2.0% from 2018 to 2019
  • are expected to increase by an annual average of 0.6% from 2019 to 2021 based on:
    • an increase of 1.7% in 2020
    • a decrease of 0.4% in 2021.

The increase in regulated network costs is driven by increasing distribution costs.

Environmental policy costs

The environmental policy costs that are relevant in Victoria during the reporting period are the Commonwealth Government's Renewable Energy Target (RET) and the Victorian Government's feed-in-tariff (FiT) schemes and Victorian Energy Upgrades (VEU) scheme. The costs associated with the RET are borne by retailers who may recover them through customer's retail bills. The costs associated with the FiT are recovered through distribution network charges or at the discretion of the retailer and the VEU is recovered through retail prices.

In 2018, environmental schemes represented 7.2% of the representative market offer and are expected to account for an increasing proportion of a representative consumer's electricity bill from 2019 to 2021.

Environmental policy costs:

  • increased 10.1% from 2018 to 2019
  • are expected to decrease by an annual average of 0.5% from 2019 to 2021 based on:
    • a decrease of 6.8% in 2020
    • an increase of 6.2% in 2021.

The increase in environmental policy costs is primarily driven by increasing costs associated with the SRES and VEU.

The representative consumer in Victoria

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In Victoria the representative consumer:

  • is a two-person household that consumes 3,865 kWh of electricity per year
  • has no off peak hot water
  • has a mains gas connection, and therefore is a dual fuel customer
  • is on a market offer.

As at March 2018, 94% of Victorian small customers are on a market offer.  A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

c/kwh2017/182018/192019/202020/21
Environmental policies0.981.401.581.65
LRET - LGC cost0.650.770.870.93
SRES - STC cost0.330.640.710.72
Regulated networks14.8014.8015.3015.69
Transmission1.501.501.551.59
Distribution12.2412.2412.6512.97
Metering1.071.071.111.13
Wholesale12.0312.9413.5714.14
Retail Component2.452.562.662.77
Cost of Supply30.2731.7033.1234.25
Residential Price 30.1332.2334.0435.23
$/year2017/182018/192019/202020/21
Environmental policies$51$73$82$86
LRET - LGC cost$34$40$45$48
SRES - STC cost$17$33$37$38
Regulated networks$769$769$795$816
Transmission$78$78$80$82
Distribution$636$636$657$674
Metering$56$56$57$59
Wholesale$626$672$705$735
Retail Component$128$133$139$144
Cost of Supply$1,573$1,648$1,721$1,781
Residential Price$1,566$1,676$1,769$1,831

Western Australia

Power prices are estimated to increase over the next two years from 2018/19 to 2020/21 in line with the price path set by the Western Australian Government. The final outcome will be determined by state government decision and may not reflect the underlying costs of supplying electricity.

Trends in residential electricity prices and bills

In 2017-18, the residential electricity cost of supply in the South-West Interconnected System (SWIS) for the representative consumer was approximately $1,573 exclusive of GST. This is made up of a:

  • 39.8% wholesale market cost component
  • 48.9% regulated network cost component
  • 3.2% environmental policy cost component
  • 8.1% retail component.

In 2017-18, the representative consumer on the electricity price set by the Western Australian Government had an annual bill of $1,566 exclusive of GST.

Environmental policy costs:

  • increased by 41.6% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 8.5% from 2018-19 to 2020-21. This is based on an increase of:
    • 9% in 2019-20
    • 3% in 2020-21.

The expected increases in residential electricity prices in 2019-20 and 2020-21 are attributable to the annual increase set by the Western Australia Government. Residential electricity prices are set by the Western Australian Government and may not reflect the underlying cost of supplying electricity.

Trends in electricity supply chain components

The below chart shows the expected trends in supply chain components in Western Australia from 2017-18 to 2020-21.

Wholesale market costs

In Western Australia, wholesale market costs comprised approximately 39.8% of the cost of supply in 2017-18, and are expected to comprise an increasing proportion of the cost of supply from 2018-19 until the end of 2020-21.

Wholesale electricity costs:

  • increased by 7.5% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 4.6% from 2018-19 to 2020-21 based on an increase of:
    • 9% in 2019-20
    • 2% in 2020-21

Regulated network costs

In Western Australia, transmission and distribution network services are provided by Western Power.

Regulated network costs comprised approximately 48.9% of the representative residential electricity bill in 2017-18, and are expected to account for an increasing proportion of the representative residential electricity bill from 2018-19 to 2020-21.

Regulated network costs:

  • remain stable from 2017-18 to 2018-19
  • are expected to increase by an annual average 3% from 2018-19 to 2020-21 based on an increase of:
    • 4% in 2019-20
    • 6% in 2020-21.

Environmental policy costs

The environmental policy cost that is relevant in Western Australia during 2017-18 to 2020-21 is the Commonwealth Government's Renewable Energy Target (RET).

In 2017-18, the RET comprised 3.2% of the representative residential electricity bill and is expected to comprise an increasing proportion of the representative residential electricity bill from 2018-19 to 2020-21.

Environmental policy costs:

  • increased by 42.9% from 2017-18 to 2018-19
  • are expected to increase by an annual average of 8.6% from 2018-19 to 2020-21 based on an increase of:
    • 9% in 2019-20
    • 4% in 2020-21.

Retail costs

In Western Australia, retail costs comprised approximately 8.1% of the cost of supply in 2017-18, and are expected to account for a relatively flat proportion of the cost of supply from 2017-18 to 2020-21.

The retail component is provided by the Western Australian Public Utilities Office for new entrants' efficient retailer operating costs and retail margin. The approach for estimating the retail cost in Western Australia is different to how the residual component is derived for other jurisdictions.

The representative consumer in Western Australia

This report uses the most common type of residential electricity consumer (the representative consumer) to analyse residential electricity prices, annual bills and the cost components of a bill. In Western Australia the representative consumer:

  • a four-person household that consumes 5,198 kWh of electricity per year
  • has no mains gas connection
  • on the electricity price set by the Western Australian Government.

A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology report.

What the AEMC is doing about prices

We are doing our bit to cut costs in the power system by addressing the drivers of our costs through our work program. Our focus on price impacts drives everything we do through the reliability and security frameworks; consumer choice, control and protection; the networks of the future and the continuing importance of integrating energy and environmental policies.

We completed or are undertaking a number of rule changes and reviews with the potential to directly or indirectly impact consumer prices and bills, including:

  • new obligations on retailers to give advance notice of price changes and providing advance warnings to shop around before discounts end
  • stopping energy discounts that can leave people worse off, allowing electricity and gas customers to have energy bills based on their own meter reading
  • raising the standard for better hardship programs and keeping new retail businesses out of the market until they have approved hardship policies in place.

At the same time we are reviewing what’s needed to support adequate investment in generation as the power system evolves to include more variable, intermittent generation and demand-side innovation. Our package of reforms in this area includes:

  • new technical performance standards for generators
  • setting up a national register of distributed energy like small-scale battery systems and rooftop solar to help AEMO better manage the power system
  • requiring generators to give at least three years’ notice of closure
  • reviews to improve the coordination of generation and transmission investment and to look at ways to integrate new technologies and demand response to help keep the power system secure
  • requiring the AER to calculate and update values of customer reliability, used to develop reliability standards
  • enabling AEMO to contract for electricity reserves up to nine months ahead of a projected shortfall under the RERT, the strategic reserve mechanism
  • making networks provide minimum levels of inertia along with the services necessary to meet minimum levels of system strength. 

We continue our analysis of market design changes which currently includes the market making obligations rule request, and advice on the impact of a default offer which has been requested by the COAG Energy Council.

We are fostering the efficiency of network investment and operations through major projects like the coordination of generation and transmission investment review; introducing new transmission connection and planning arrangements; introducing competition in metering; and establishing the value of customer reliability.

Visit the AEMC project page
Resources & downloads

About us and the electricity price trends report

Now in its ninth year, the AEMC price trends report is provided at the request of the Council of Australian Governments Energy Council.

It is a core document used to inform a range of stakeholders including jurisdictional governments, the Australian Energy Market Operator the International Energy Agency and the Reserve Bank of Australia.

This year’s report covers the period from 2017/18 to 2020/21. It focuses on the drivers of household bills across the three key parts of the electricity supply chain – wholesale (generation); regulated networks (transmission and distribution); and environmental (government policy schemes). A residual applies in most jurisdictions. The residual is the difference between bill outcomes and these three key cost components.

Price trends will affect individual households differently depending on how much each consumer uses electricity, and how willing they are to switch to a better energy deal where market offers are available. No two households use energy in the same way. Knowing how much power you use and when is important in controlling electricity bills in the future as new technologies become more affordable and energy entrepreneurs expand demand response options for consumers.

Price trends identified in this report are not a forecast of actual prices, but rather are a guide to pricing and bill directions based on current expectations, policy and legislation. Actual price movements will be influenced by how retailers compete, the dynamics of wholesale spot and contract markets, the outcomes of network regulatory decisions, and changes in policy and regulation.

The prices presented in this report are specific to the representative consumer. The representative consumer is different for each jurisdiction and is determined using a representative annual consumption level either calculated from benchmark values published by the Australian Energy Regulator (AER) or provided to the Australian Energy Market Commission (AEMC) by state and territory governments.

This year’s report has changed the method used to calculate wholesale electricity purchase costs. A detailed explanation of the pricing methodology is set out in the 2018 Residential Electricity Price Trends Methodology Report.

The AEMC

The AEMC is the rule maker for electricity and gas markets, and is a key advisor to the COAG Energy Council and its Energy Security Board.

The AEMC is very focused on least-cost solutions. We are putting structures in place that enable consumers to take control of their energy usage and bills, bearing in mind that the more costs you put into the system, the more burden there is on consumers.

Energy is one of the most important cost inputs to the Australian economy. High energy prices directly impact many parts of our economy, particularly retail and small business.

Our intention is to put the right settings in place so consumers can choose how much they want to engage with the energy market, without putting cost burdens on households and the economy that could be easily avoided with better planning and more efficient practices.