Updated: Jun 12
As a direct result of Australian Energy Regulator (AER) authorisation, the Network Transmission and Distribution costs for all of NSW and South East Queensland will see significant increases for financial year 2021/22. While we continue to protect Bright Spark Power customers with Our Best Rate Guarantee, and through investment in renewable energy, we take the time here to explain what affects the electricity price we offer.
Your electricity prices are made up of a mix of fixed and variable supply cost inputs, that are all taken into consideration to produce the retail electricity plans that are offered to market.
Network Transmission and Distribution Costs
The cost of transporting electricity ('the poles and wires') from generators to your service address is the largest input cost to your retail Electricity Plan. Annual Transmission and Distribution Prices Each financial year, every distributor in the National Energy Market makes a submission of pricing for operation in their region. These submissions are made to the Australian Energy Regulator, who authorise and set the rates. These rates are a major input to determining the retail rates. Government and Regulatory Input to Prices The Australian Energy Market Commission (AEMC) announced in February 2021, that consumers should expect to see a reduction in electricity prices in NSW (2%) and in QLD (14%) by FY22/23. This set media expectations that electricity prices would continue a downward trend. Recent data does show a downward trend in retail electricity prices, however, it is mostly from factors not attributable government action or regulatory change. What the Australian Energy Regulator (AER) does control, is the transmission and distribution rates. In May 2021, the AER authorised and approved residential supply prices for NSW and South East QLD that includes:
increased pricing for residential distribution costs in NSW ranging from a minor 1.11% decrease offset by up to 14% increases for usage charges, up to 5.5% increase in network access charges, and from 3.37% to 50% increase in demand charges.
in South East Queensland up to 45.46% increase in usage charges, 4.4% in network connection charges, and 3.37% in demand prices.
In summary - the Australian Energy Market Commission (the energy rule maker) publicly released a forecast that consumers should expect prices to further decline, whilst three months later, the Australian Energy Regulator (the energy rule enforcer) approved and authorised increased prices for Consumers in NSW and QLD. As a result of these AER authorised distributor cost increases, we have had to modify our Electricity Plans with price changes effective the 1st July 2021.
AER Authorised Financial Year 2021/22 Distribution Prices We have summarised the year on year changes in the table below, comparing financial year 20/21 vs. 21/22 per distributor:
General Usage Rates include: General Usage Flat rates and Time of Use Usage Rates i.e. Peak, Shoulder, and Off-Peak Usage.
As a result of these AER authorised changes, the Bright Spark Power retail Electricity Plans have been updated on our website.
Electricity Generation Prices
The wholesale cost of the electricity that you use is the second biggest input to the cost of your Electricity Plan.
These prices are more volatile than any other cost. They fluctuate and change every 30 minutes and are managed by the Australian Energy Market Operator (AEMO). It is this volatility that we manage as part of the input price for your fixed rate electricity plan. These prices can become negative (extremely rare) and can increase up to a maximum value of $15,000 per MWh, which is $150 per kWh in electricity plan usage terms (also rare). The price generally sits between $30 per MWh to $90 per MWh and varies throughout the day. If you are keen to see the current, historical, and forecast cost, you can visit the AEMO website where they openly disclose the electricity cost prices paid by Retailers.
There are a variety of levies, taxes, and schemes that increase the price of electricity.
The universally applicable taxes (STC's and LGC's) are administered and regulated by the Clean Energy Regulator (CER). In NSW, customers also pay another tax, the Energy Saving Scheme, which is administered by IPART (Independent Pricing and Regulatory Tribunal) which has the objective of reducing the amount of electricity used year on year. If the objective is achieved, there is no charge, however, if the objective is not met, then a levy/penalty/tax is applied to the electricity retailer, which in turn is applied to the retail per kWh price. Current Taxation, Levies, and schemes:
The current effective per kWh cost for the Small Scale Technology Generation Certificates (STC) and Large Generation Certificates (LGC), excluding the applicable administration fees that every retailer needs to pay to the Clean Energy Regulators at the time of surrendering the certificates:
The current effective 'tax' for STC's for 2021 is 1.2 cents per kWh, up from 1.0 cents per kWh vs. last year.
The current effective 'tax' for LGC's for 2021 is 0.8 cents per kWh, unchanged vs. Last year.
The current effective 'tax' for the NSW Energy Savings Scheme for Calendar Year 2021:
The effective 'tax' of 0.8 cents per kWh is directly applied to retail electricity usage rates
Solar Feed-in Tariffs
Solar feed-in tariffs when originally launched, were subsidised by various state and federal government schemes.
Most solar feed-in tariffs available in market today are exclusively commercial tariffs provided by the electricity retailer, calculated from the value of the generated electricity, the applicable taxes on that electricity, and the associated transmission and distribution costs. In the most simple form, the electricity generated by small scale generation (residential and small business solar) is subject to transmission and distribution costs, taxation via STC and LGC schemes, and are competing with large scale generation. Hence, the price of solar feed-in tariffs has continued to fall to more accurately reflect the actual value of the electricity generated. The Bright Spark Power solar feed-in tariff for FY21/22 has been updated to reflect the increased transmission and distribution supply pricing, current STC and LGC schemes, and the current average market value of electricity. We have written more about the role of home solar generation here.
If you have any questions or concerns about your electricity plan please email firstname.lastname@example.org or call 1300 010 277 weekdays 8am to 6pm.