The Queensland Competition Authority (QCA) has released its draft determination on regulated retail electricity prices that will apply to standard contract customers in regional Queensland from 1 July 2023.
QCA Chair Professor Flavio Menezes said this year’s draft determination forecasts higher electricity prices for customers in regional Queensland.
“The significant increase in draft prices is mainly due to an increase in forecast energy costs—in particular, wholesale energy costs, which are the costs that retailers incur when purchasing electricity from the National Electricity Market (NEM),” Professor Menezes said.
Professor Menezes explained that retailers adopt a range of strategies to reduce their exposure to changing prices in the NEM, including to hedge their risk through the purchase of ASX contracts. This allows retailers to lock in a price for electricity that they will deliver to consumers at a fixed price at a later date.
“Our wholesale energy cost estimates reflect a significant increase in ASX contract prices, driven by market expectations of higher spot prices and greater price volatility,” Professor Menezes said. “This is likely due to higher coal and gas prices, which have been impacted by the war in Ukraine, as well as uncertainty around the availability and reliability of coal-fired power plants, which impacts the supply–demand balance in the Queensland region.”
“While we have seen recent falls in ASX contract prices following the government price caps on coal and gas, retailers had already purchased a portion of energy for 2023–24 at the higher prices.”
On the expected increases, Professor Menezes said overall, the draft prices would result in a 28.9% increase in the annual bill for a typical residential customer (on tariff 11) and a 26.1% increase for the typical small business customer (on tariff 20).
“The annual bill for a typical residential customer is forecast to increase by $432, from $1,496 to $1,928. For the typical small business customer, the annual bill is forecast to increase by $497, from $1,907 to $2,404.”
Prices are set in accordance with the Queensland Government’s uniform tariff policy, which means most regional customers pay less for electricity than it costs to supply them.
Professor Menezes acknowledged that the expected increases could place additional pressure on households and businesses that were already facing cost of living challenges.
“I strongly encourage customers facing hardship to contact their retailer to discuss support measures that may be available to them. There are a range of government concessions, rebates and other forms of assistance available,” Professor Menezes said.
Professor Menezes noted it is likely prices will change in the final determination, based on feedback from stakeholders and updated data. In particular, wholesale energy costs are expected to change with the inclusion of an additional three months of ASX market data, and updates to other cost inputs may also result in price changes.
Consultation is an important part of the QCA’s assessment processes, and stakeholders are encouraged to provide feedback on the draft determination (which is available on the QCA website) by 14 April 2023.
The QCA plans to hold information sessions on the draft determination in March and April 2023. Stakeholders can make a submission on the QCA website and sign up to email alerts to receive details for the information sessions.
The final determination is expected to be published by 9 June 2023, and prices will apply from 1 July 2023.
The QCA has also released a draft determination on the solar feed-in tariff, which is the compensation a customer in regional Queensland will receive for the electricity they export to the electricity grid. The draft feed-in tariff for 2023–24 is 12.952 cents per kilowatt hour (c/kWh), which is 39% higher than last year’s feed-in tariff. Professor Menezes said that consumers with rooftop solar PV may be able to reduce the impact of electricity price increases by shifting their load to times during the day when there is solar generation.
Further information can be found on the QCA website.
Media enquiries: Cole Lawson Communications, 07 3221 2220.View project