Australians can look forward to cheaper electricity bills this year, despite household consumption rising thanks to an influx of people working from home.
The Australian Competition and Consumer Commission (ACCC) today found wholesale electricity costs have fallen dramatically, with retailers now required to pass on the cuts by law.
“COVID-19 had a major effect on electricity use last year,” ACCC Chair Rod Sims said.
“Many households that were already experiencing financial difficulty had higher electricity bills to pay, and although lower bills for small businesses would normally be something to celebrate, it wasn’t a welcome outcome in the context of a pandemic recession.”
Between mid-2019 and early 2021, average wholesale spot prices – which govern how much retailers pay for electricity – fell by 50 per cent.
Despite outages to major generators in Queensland, the ACCC’s electricity experts believe wholesale costs will remain low in 2021.
“We expect 2021 to be a better year for households and small businesses as large reductions in the wholesale cost of electricity continue to flow through to people’s bills,” Mr Sims said.
In its latest electricity markets report, the ACCC found that despite falling wholesale costs many small business customers were not taking advantage of cheaper rates.
“The proportion of small business customers on standing offers in 2020 was 16 per cent, which is more than double the residential proportion, and this percentage has not dropped over the last three years,” the ACCC noted.
“For a typical small business customer, the median standing offer was 35 per cent more expensive and the annual saving from switching to a median market offer was almost $350.”
Mr Sims encouraged business owners to shop around for a better deal as a way to lower their overheads.
“We are concerned about the high number of small businesses that are still on more expensive standing offers,” Mr Sims said.
“Standing offers were originally intended to be a safety net for customers to get a basic service at a reasonable price, but over time they became some of the highest-priced plans. Reforms were introduced to cap standing offers and protect customers from very high prices, but people can still save more on a market offer.
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