Issue date
AER reference
NR 40/20

Wholesale gas and electricity prices remained low during Q3 2020 amid softer international gas prices and reduced costs for electricity generators.

In most markets, while gas prices increased slightly from last quarter, they remained at levels last seen in early 2016 of $4.00-5.50 per GJ.

Gas prices in Victoria decreased for the seventh consecutive quarter to $4.56 per GJ.

Domestic spot gas prices have been tracking falling Asian spot LNG prices, but rises in Asian markets during the quarter pushed domestic gas market prices higher.

AER Chair Clare Savage said recent gas market reforms are also a key driver of the lower wholesale prices across the East Coast.

“More competition in spot markets allows markets participants to source gas at cheaper prices.

“Additionally, Day Ahead Auction reforms have driven cheaper gas transportation and wider access to markets,” said Ms Savage.

Electricity prices on the mainland were between 44 per cent and 48 per cent lower than at the same time last year.

Q3 2020 prices ranged from $34 per MWh in Queensland to $54 per MWh in Victoria, reflecting a record number of negative prices for any quarter since the commencement of the National Electricity Market in 1998.

There were several instances of very low daytime demand in Victoria and South Australia due to more rooftop solar generation in the quarter and an unusually warm September.

Coal generated electricity continued to be offered at low prices, driven by lower fuel prices and increased competition from lower priced gas-fired generation and renewables than a year ago.

“These figures are good news for consumers. Sustained low wholesale electricity prices translate over time into lower retail prices for businesses and households.

“Looking forward, falling contract prices for the coming summer reflect market expectations that there will be enough supply to meet summer demand in the first quarter of 2021,” said Ms Savage.

Notes to editors

Relevant electricity prices by region (Q3 2020 volume weighted quarterly average):

  • Victoria $54 per MWh
  • NSW $49 per MWh
  • Queensland $34 per MWh
  • South Australia $46 per MWh
  • Tasmania $51 per MWh

Relevant gas prices by market (Q3 2020 quarterly average):

  • Victoria $4.56 per GJ
  • Sydney $4.37 per GJ
  • Brisbane $4.17 per GJ
  • Adelaide $5.41 per GJ.

About the AER

The 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.