Policy analysts at the McKell Institute have for the first time modelled the impact of wholesale gas prices on household power bills finding consumers are already paying between $100 and $200 more than what the competition watchdog considers reasonable.
The Australian Competition and Consumer Commission (ACCC) believes wholesale gas prices on Australia’s east coast should be between $6.30 a gigajoule and $7.80 a gigajoule, however the price is currently above $9 a gigajoule, the report shows.
Accordingly, the McKell report has calculated the hikes added about $144 a year to electricity bills for households in the Calare electorate in 2017 as reliance on gas-fired power grew.
Using figures from the ACCC, and taking into account the federal government’s current gas policy settings, the McKell modelling found households could face further financial strain.
If wholesale gas prices rise to $14 a gigajoule by the end of next year, which the McKell Institute considers a reasonable possibility, the report said average households in the Calare electorate would pay about $1788 on their annual power bill.
The amount would be $196 more than they should be paying if prices remained at $9.
The figures are based on the current forecast price and consumption trends, without a significant reduction in wholesale prices.
But if the federal government is able to bring prices back to $6.30 a gigajoule, NSW households would save $85 in the next two years.
The NSW Farmers’ Association has been raising concerns about the impact of electricity costs in regional areas.
Association chief economist Ash Salardini called the predicted price rises across the state, equating to up to 20 per cent on each bill, as concerning.
“If you translate that to some of our farmers’ bills, that could be an extra $20,000,” Mr Salardini said.
“So some dairy farmers are paying up to $100,000 for their electricity.
“A 20 per cent rise would mean $120,000… So the average bill last year was $50,000 for a dairy farmer and now it’s getting closer to $100,000, so it’s very concerning.”
The association has called for action and Mr Salardini suggested greater reliance on distributed energy resources.
“Solar backed up by battery, particularly for regional Australia, because not only does it reduce generation costs, it also reduces network costs and together they’d be the largest components of a regional person’s power bills,” he said.