Energy Action Price Index

Energy Action Price Index

What happened to electricity prices last month?

 

In the Australian energy market, the forward price of electricity for medium to large users fluctuates from day-to-day. Energy Action’s Price Index (Business) (EAPI) provides clarity to the market encompassing pricing from energy retailers via the Australian Energy Exchange (AEX).

EAPI represents the average commodity price of retail electricity paid by Australian businesses based on a Standard Retail Contract (commences in 6-months and operates for 2½ years). EAPI is created from the lowest cost offers submitted by retailers via the AEX and reflects the cost of commodity electricity to commercial and industrial customers.

For more information about the Energy Action Price Index, read our Frequently Asked Questions (FAQs).

Energy Action has redefined the EAPI for South Australia. From 2 February 2016 onwards the Standard Retail Contract for South Australia commences in 2-months and operates for 1 year. This change has been made to better reflect market conditions in South Australia where contract lengths have shortened considerably since late 2015. This change to the EAPI is limited only to the index for South Australia. Standard Retail Contract definition for all other states remains unchanged.

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The Retail Market in September & Early October

  • Retail prices have been little changed across NSW, VIC and QLD since mid July and continue to trend flattish across those states.
  • In South Australia prices are also currently trending flat having come off slightly and from a very high base over the previous two months.
  • As has been the case for several months contracts of longer duration continue to be best value with three year contracts selling at a discount of around 0.4c/kWh to two year contracts in NSW, QLD and South Australia and a larger discount of 0.8c/kWh in VIC. Having become firmly established we expect this discount to continue.
  • Most interest is for contracts to start 1st January 2018 and run for a duration of two to three years with the longest term contracts terminating in December 2020. Little interest is being shown in one year contracts, which are at substantially higher prices, compared to two year contracts (>1.0 c/kWh).
  • We are not seeing anything pricing out beyond the end of December 2020.
  • One positive development has been moves by the NSW government to head off closure of the Springvale mine, supplier to the 1,400MW Mt Piper power station. Legislation is currently before the house to nullify the Court of Appeal’s ruling denying an extension to its mining authorisation.
  • One development of indeterminate effect has been the success of the government in wringing additional supplies of gas for domestic consumption from the Curtis Island LNG projects. Whilst this is a positive outcome it has failed to have any impact on retail prices as yet.
  • Separately the ACCC report into NEM electricity prices placed most of the blame squarely on the network component of the bill whilst recognising that the commodity electricity component has also increased substantially. The retail and generation markets were also criticised for lack of competition.
  • Market sentiment continues to be balanced between the fear of high prices and possibly supply restrictions during the forthcoming summer and anticipation of potentially cheaper prices as more gas becomes available for domestic consumption and power generation.