Benchmark power prices are set to climb in some parts of the country by nearly 9 per cent. The Australian energy regulator has put out its draft 'default market offer' for next financial year which details the price rises. The Albanese government says the increases demonstrate the need for more cheap renewable power, while the opposition argues it's a policy failure.
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00:00These are essentially an annual thing, they happen ahead of the new financial year which
00:08begins in July and what it really amounts to is a setting of the, I suppose the benchmark
00:15price as you mentioned in your introduction, it's the benchmark against which all other
00:21contracts in the market are priced and it acts as some sort of a safety net, albeit
00:27not a particularly good one because it tends to be dearer than you can certainly get if
00:32you actually go and get a competitive offer.
00:36It has risen as you mentioned by up to 9% or the better part of in NSW for example,
00:43it's risen by about 5% on average and as little as 2.5% in some places but it is a resumption
00:52of price increases that we saw in a supercharged way in the wake of Russia's invasion of Ukraine
00:58and the energy crisis it precipitated, so it's more bad news for electricity consumers.
01:05The reasons why, I mean they're varied, suffice to say cost pressures exist right across the
01:12electricity supply chain and the system, whether it's the cost of generating power, keeping
01:18old coal-fired power plants going, whether it's the costs of interest on hugely expensive
01:25poles and wires, transmission and distributions projects, the cost of making them stronger
01:30and expanding the networks or according to Claire Savage, the Chair of the Australian
01:36Energy Regulator today, the cost of the retailers themselves, so their systems, their billing
01:41systems, their cost of acquiring and keeping customers, it's all going up and that's why
01:47we're seeing this unfortunately for consumers today.
01:50And what's been the fallout from today's announcement?
01:55Well Claire Savage was first off the blocks, she was keen to say that this was not a decision
02:02the regulator came to lightly, they tried to strike a balance between trying to ensure
02:08that retailers can make money and be profitable while not sort of making out like bandits.
02:17On the one hand these costs are going up and that seems to be a fact of life, and on the
02:23other hand trying to look after consumers and making sure that there is some protection
02:29for consumers, that there is a price that tries to make sure they don't, in her words,
02:35pay more than they need to or really get gouged.
02:39And so it's a balancing act they try to strike every year.
02:43The government, which if you remember campaigned ahead of the last election on being able to
02:50reduce power prices and saying its plan would lead to lower power prices by something in
02:56the order of $275 against some measure, it's acutely sensitive to this and so the Minister
03:04Chris Bowen has come out today and he has very much defended the government's record
03:09on energy and said that the answer to these problems of high prices lies in more renewable
03:14energy.
03:16One of the reasons for this decision today is spikes caused by coal-fired power stations
03:23breaking down.
03:24Not a day in the last two years have we had a coal-fired power station not break down
03:30somewhere in Australia.
03:31I'm not talking about planned maintenance, I'm talking about unexpected breakdowns which
03:35then see energy prices spike.
03:37We want to replace that power with more reliable, cleaner, cheaper, renewable energy.
03:43Mr Dutton wants to keep that power for longer, that coal-fired power for longer.
03:50So Joe, I mean perhaps unsurprisingly the Coalition has also seized on this announcement
03:56from the Regulator today.
03:58It has said that this was predictable, that it is evidence of a failing plan by the Federal
04:04Government and that the Government is essentially putting all its eggs in one basket which is
04:09renewable energy and storage and I suppose not enough in some of these more conventional
04:15technologies.
04:16It, for its part, wants to build a fleet of nuclear power plants across Australia if it
04:22forms government over a long period of time but here's what the Opposition had to say.
04:28When you tax and spend you drive up inflation and if you do that you can keep giving $300
04:33but as we see today you then push electricity prices up by $1,300.
04:38I want to fix the energy problem, I want to fix the source of people's grief which in
04:43large is the bad economic decisions being made by this Government as well as a bad energy
04:48policy.
04:49If we can do that we can help families and we can help people afford to live again.
04:55It's also worth noting, Joe, that Victoria's Regulator separately released its equivalent
05:03decision today.
05:05Prices in Victoria are barely going up at all.
05:08In other states there are separate arrangements still.
05:10It was a draft by the Australian Energy Regulator so a final decision will come out probably
05:15in the next couple of months.