Australian gas and electricity prices have hit their lowest in four years in the first three months of 2020.
Data from the Australian Energy Market Operator’s (AEMO) Quarterly Energy Dynamics Report for Q1 2020 shows wholesale gas and electricity prices were at their lowest levels since 2016 as a result of increased reliable generation and lower demand.
The report found that COVID-19 has only had a modest impact on electricity demand, with the fall in wholesale electricity prices occurring before the onset of the pandemic.
Minister for Energy and Emissions Reduction Angus Taylor said delivering energy at sustainable, affordable prices for Australian businesses and families remains a priority for the Australian Government, particularly for those who are being affected by COVID-19.
“Australians should be confident that our domestic supply of gas and electricity is secure, and that the Government’s efforts to encourage investment and maintain downward pressure on prices are paying off,” Minister Taylor said.
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“Since October 2019, we have been seeing consistently strong reductions in the wholesale price compared to previous years.
“Our energy systems and markets continue to operate steadily, and we will continue to monitor the effects of the COVID-19 pandemic on energy supply and work with the sector to ensure we maintain a reliable supply.”
The AEMO report found east coast wholesale gas market prices declined by 42 per cent on average, compared to the first quarter of 2019, from $9.75 per gigajoule (GJ) to $5.63/GJ, with more gas being offered into the markets at lower prices, falling international gas prices and increased Queensland gas production.
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Significantly, east coast gas demand increased slightly compared to a year ago. Residential, commercial and industrial demand all increased, while the quarter also recorded the second highest quarterly supply of gas to Curtis Island for export.
Wholesale electricity prices across the National Electricity Market (NEM) also fell to $66 per megawatt hour (MWh) – their lowest level since the fourth quarter of 2016 and down 49 per cent from $130/MWh in Q1 2019 – due to reduced operational demand, lower wholesale gas prices, and a reduction in bids from dispatchable generation.
With wholesale costs making up around a third of residential electricity bills (and far more for industry), these price falls are expected to result in savings for Australian families and businesses.
The Government expects that when the cost of wholesale electricity goes down, retailers will pass on these savings to their customers.