This page provides more information about the recent news on wholesale energy prices, and what it means to you as a customer of ours.
What’s going on in the wholesale energy market right now?
The wholesale price of energy has gone up by 300 - 400% over the past 12 months.
This image is taken from Australian Securities Exchange (ASX) on 12th July 2022 - link here - the Australian Power Index [Eastern] (APIE) demonstrates the dramatic change in the cost of wholesale energy over the past 12 month period.
These prices are now at record levels and many economists don’t see a quick fix. The government held an energy crisis meeting on 8th June 2022 to discuss this further, and laid out an 11 point plan to address it. You can read more about it here. It’s an ever evolving situation.
Why does this affect my price?
Wholesale energy prices make up roughly 30-40% of your energy costs.
The rest is mostly made up of costs from your network distribution company and metering provider (this could be one of the following SA Power Networks (SA), Energex (QLD), Ausgrid, Essential, Endeavour (NSW), Jemena, Citipower, Powercor, United Energy or Ausnet Services (VIC)) which is roughly 40-50% of the charges. This pays for the poles and wires associated with getting the energy to your property, along with the meter and maintenance of it.
There are then other government schemes and environmental initiatives that every energy retail must pay for, this makes up around 5-10% of the bill.
And the bit on top is our retail component, the costs to operate as a business. We typically try to keep it low compared to other retailers, as we have a very streamlined service model.
Since wholesale energy makes up such a large portion of the bill - when the wholesale price goes up, it can have a bigger impact on the price of supplying customers with energy.
Why is this happening with wholesale energy prices?
There are a few things that economists in Australia are pointing to, as the main culprits for the current price pressures, they include: failing coal units, lack of coal supply, lack of gas supply and high demand in the system due to the cold winter weather. Australia is also seeing price pressure from the global shortage in oil and gas caused by the Ukraine conflict. If you’d like to find out more you can read this article from an independent source here.
In short, it’s unprecedented. All energy markets around the world are seeing something similar right now. We also operate in the UK and France where the impact of the Ukraine conflict, being so close to them, created price pressure nearly immediately. The demand for gas and oil created by the lack of supply from Russia and Ukraine, in other countries, has had a global impact to energy prices.
Is this true of gas too?
Unfortunately, yes. Whilst we don’t currently have a gas offer, we are soon to launch one, and we have seen similar jumps in the wholesale cost of gas over the past few months. If you’re in VIC, your gas retailer may communicate a price change in July, for 1st August 2022.
What’s happening to my price in August?
If you’re in VIC, then the energy regulations only allow retailers to adjust their prices on 1st August for existing customers. This is the same date for all retailers.
In QLD, SA, NSW retailers can make changes to their variable prices for existing customers at any time in the year.
If the wholesale price goes down, will our rates go down?
If there is an opportunity to pass on savings to you in the future, we will certainly do so. We aim to be as cost-reflective in our pricing as possible. This means passing on savings whenever possible.
Can I get a fixed rate contract?
We do not currently offer fixed rate contracts. Some retailers do offer fixed rate 12 month contracts, but they do tend to be slightly more expensive, as the retailer will likely price in a lot of the anticipated risk associated with both the change in wholesale energy prices and the change in network costs (which happens every year on 1st July) and any other environmental costs that are administered by state (that are also adjusted on an annual basis).
Will all retailers be doing a price change?
It has been widely reported that other retailers will have to make considerable changes to their prices for 1st August and beyond. We can’t guarantee that all retailers will make a change because it is up to them. However, everyone is experiencing an increase in wholesale prices and network costs - this is not unique to us.
Can I switch to another retailer?
Of course, we have no exit fees and customers can leave at any time. The easiest way to compare is with the government websites (in VIC it’s https://compare.energy.vic.gov.au/ and in SA , QLD & NSW it’s https://www.energymadeeasy.gov.au/)