Households in New South Wales should brace themselves for higher electricity prices if wholesale gas prices remain uncompetitive, according to a McKell Institute report.
The report showed that electricity bills may increase up to $660 by the end of 2019. The Australian Workers Union commissioned the analysis and it urged the federal government to implement more strategies to lower the cost of gas prices.
McKell Institute based its report from the Australian Competition and Consumer Commission’s (ACCC) figures. During the previous year, residents in New South Wales paid as high as $175 more on their electric bills. This stemmed from wholesale gas rates that were considered to be unfair based on the ACCC’s standards.
The ACCC’s reasonable rate for wholesale prices should amount between $6.30 and $7.80 per gigajoule. However, the report claimed that prices currently exceed $9 per gigajoule and can even rise up to $22 per gigajoule. The issue of costly electric bills is not only a concern in NSW, but also in other states.
Queensland residents could pay $313 on top of the current utility rates if current wholesale gas prices remain high, while those in Victoria are expected to pay an additional $254, according to the report. As a result, more Australians will install alternative power sources such as solar energy systems and battery storage.
While the report only warned about rate hikes for households, expensive wholesale gas may also affect the power consumption of businesses. For this reason, enterprises with mechanical heating, ventilation and air-conditioning systems should make sure their equipment such as buffer tanks or expansion vessels are well-maintained to control electric bills.
Increased competition will be a solution for high wholesale gas prices in Australia, while households and businesses should begin to invest in energy-efficient equipment to reduce their electricity consumption.