2018 Residential electricity price trends review

21 Dec 2018

This is the ninth annual residential electricity prices trends report prepared by the Australian Energy Market Commission (AEMC) at the request of the Council of Australian Governments’ Energy Council (COAG or the Council).

The 2018 residential electricity price trends report (2018 report) identifies changes in the energy supply chain cost components that are driving residential electricity prices and bills for each Australian state and territory, and nationally, from 2017-18 to 2020-21 (the reporting period). By focussing on trends in the cost drivers of prices and bills, the report helps to focus attention on key sectoral issues.

Residential electricity bills are calculated by multiplying the consumption of the representative consumer in each jurisdiction by the price they pay for electricity. The representative consumer’s consumption is either based on the most common consumption profile of consumers in each jurisdiction, or a quantity provided by the jurisdictional government. The prices used for each jurisdiction are the average of the lowest market offer from each retailer, weighted by market share. The national results are then determined by weighting the jurisdictional price and bill outcomes by the number of consumers in each state or territory.

Given this analysis method, it is important to recognise that the pricing and billing outcomes do not constitute specific pricing and billing forecasts, and that the results may not reflect the actual prices and bills that consumers pay. Actual price movements will be influenced by how retailers compete, the dynamics of the wholesale spot and contract markets, the outcome of network regulatory decisions, and changes in policy and legislation. However the results do reflect movements in the underlying costs of service provision and are a guide to pricing and bill directions based on current expectations, policy and legislation.

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