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Energy Action Price Index - Monitor and compare business electricity rates

 

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 1st July 2018 onwards the Standard Retail Contract for South Australia will has been recalculated for 30 months duration commencing in 6 months’ time. This puts the calculation of the South Australian EAPI on the same basis as those for NSW, Victoria and Queensland which remain unchanged. For further information on this change please read our Frequently Asked Questions (FAQs).

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Commentary for Jan & Feb 2020 

  • Retail prices for Commercial & Industrial customers have been trending downwards. This has been primarily due to recent market announcements around improved supply conditions as more renewable energy generators come online and significant reduction in operational demand. Rooftop PV has greatly offset the increased demand due to cooling requirements.

  • Loy-Yang A and Mortlake generators came online just before Q1 2020 despite AEMO’s expectation that the generators will not come on-line in time for Q1 2020. This coupled with increased rooftop PV and increased overall capacity have placed downward pressure on the market. Additionally, Wind and solar generation has increased compared to last summer.

  • Bushfires and extreme weather conditions have brought about considerable challenges and volatility to the spot market. While we see limited linkage between prices set in the spot market and prices in the forward contract market, we expect the current downward pressure on prices is the ideal time to go to market for a fixed price contract or procurement auction. We expect the price to increase in the medium time-frame and recommend Commercial & Industrial customers to lock in the favourable rates.  

  •  Large Generation Certificate (LGC) prices have fallen significantly and currently trading at about $30. The reduction is due to oversupply and forecast of increased production. This has encouraged retailers to defer surrender of LGCs, which also reduces the actual demand in the market and further decreases the price. There has been a few spikes in the prices, which have been market announcement driven. For instance, LGC prices spiked when SA-VIC interconnector was down and wind farms were forced to disconnect. This led to temporary reduction in supply of LGC and therefore increased in the price. With recent rainfall, we expect further generation from hydro-generators which will increase the supply of LGCs.  

  • It is noteworthy to mention that Victorian Energy Efficiency Certificates (VEEC) prices have been trending upwards. This has been due to a number of speculations about local government increasing the compliance percentage coupled with change in regulation about lighting upgrades and exemptions. Lighting upgrades are the most widely used methodology to increase efficiency and the government is moving to limit this method which will reduce the generation. Currently VEEC is trading at about $33.50.