Australian Energy Regulator highlights fall in wholesale prices

Wholesale prices continued to fall across the National Electricity Market (NEM) in the fourth quarter of 2019 (Q4 2019) according to the Australian Energy Regulator (AER).

The AER monitors the performance of the NEM and gas markets and provides regular, independent reports on price movements and generation.

These quarterly reports inform the AER’s overall Effective Competition Report, which provides analysis of NEM performance over a two year period. The first report was issued in 2018, with the second edition to be released later this year.

In Quarter 4, average wholesale prices were between 10 and 20 per cent lower year on year and ranged from $65 per MWh in Queensland to $87 per MWh in South Australia.

The AER’s monitoring role includes reporting on high price events. During Q4 there were a number of half hour interval prices over $5000 per MWh in South Australia and Victoria in late December, driven by high demand at a time of extreme weather.

AER Chair Clare Savage said that market monitoring and analysis helps ensure consumers pay no more than necessary for safe and reliable energy.

“These figures show that for the first time in two years, since Q4 2017, average prices in all NEM states were below $90 per MWh. This is good to see after a period of sustained high prices.

“There were some high price events late in the quarter during periods of extreme heat across the south-east of the country. We are investigating these events and will be releasing our reports into those soon,” said Ms Savage.

The extreme heat late in Q4 coupled with the unavailability of some generation plant, particularly in Victoria, had given rise to concerns that there would not be enough generation to ensure reliable electricity supply.

“The report demonstrates that the NEM coped well under the pressure of combined extreme weather and generation plant problems later in the year.

“Generator outages were progressively resolved, meaning there were no actual reserve shortfalls in the quarter and reserve contracts were only dispatched once,” said Ms Savage.

Downstream wholesale gas prices continued to trend down, with prices falling for the fourth consecutive quarter to below $8/GJ in Victoria and Sydney.

Quarterly gas production was at record levels at Roma, Queensland, coinciding with record Queensland LNG exports despite falling Asian LNG spot prices.

About the AER

The Australian Energy Regulator (AER) works to make all Australian energy consumers better off, now and in the future.

  • We regulate electricity networks and covered gas pipelines, in all jurisdictions except Western Australia. We set the amount of revenue that network businesses can recover from customers for using these networks.
  • We enforce the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. We monitor and report on the conduct of energy businesses and the effectiveness of competition.
  • We protect the interests of household and small business consumers by enforcing the Retail Law. Our retail energy market functions cover New South Wales, South Australia, Tasmania, the ACT and Queensland.
  • We drive effective competition where it is feasible and provide effective regulation where it is not. We equip consumers to participate effectively, including through our Energy Made Easy website, and protect those who are unable to safeguard their own interests. We use our expertise to inform debate about Australia’s energy future.
Issued date: 
17 February 2020
AER reference: 
NR 05/20
AER Media 0466 409 921