Victorian Energy Prices July 2018
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Victorian Energy Prices July 2018 An update report on the Victorian Tariff-Tracking Project Victorian Energy Prices July 2018 An Update report on the Victorian Tariff-Tracking Project May Mauseth Johnston, August 2018 www.alvissconsulting.com www.vinnies.org.au twitter.com/AlvissC twitter.com/VinniesAust Contact: Gavin Dufty Manager, Social Policy Unit Victoria St Vincent de Paul Society Phone: (03) 98955816 or 0439 357 129 twitter.com/gavindufty © St Vincent de Paul Society and Alviss Consulting Pty Ltd This work is copyright. Apart from any use permitted under the Copyright Act 1968 (Ctw), no parts may be adapted, reproduced, copied, stored, distributed, published or put to commercial use without prior written permission from the St Vincent de Paul Society. Disclaimer The energy offers, tariffs and bill calculations presented in this report and associated workbooks should be used as a general guide only and should not be relied upon. The workbooks are not an appropriate substitute for obtaining an offer from an energy retailer. The information presented in this report and the workbooks is not provided as financial advice. While we have taken great care to ensure accuracy of the information provided in this report and the workbooks, they are suitable for use only as a research and advocacy tool. We do not accept any legal responsibility for errors or inaccuracies. The St Vincent de Paul Society and Alviss Consulting Pty Ltd do not accept liability for any action taken based on the information provided in this report or the associated workbooks or for any loss, economic or otherwise, suffered as a result of reliance on the information presented. If you would like to obtain information about energy offers available to you as a customer, go to the Victorian Government’s website www.switchon.vic.gov.au or contact the energy retailers directly. Acknowledgments This project was funded by Energy Consumers Australia (www.energyconsumersaustralia.com.au) as part of its grants process for consumer advocacy projects and research projects for the benefit of consumers of electricity and natural gas. The views expressed in this document do not necessarily reflect the views of Energy Consumers Australia. We also wish to thank and acknowledge the efforts of the various retailers that review and provide feedback on these reports. While any errors that may occur are our own, we appreciate their views, suggestions and cooperation. The Victorian Tariff-Tracking Project To date, this project has tracked electricity and gas tariffs in Victoria from July 2008 (retail price deregulation took effect on 1 January 2009) to July 2018, and developed a spreadsheet based tool that allows consumer advocates to build on the initial analysis and continue to track changes as they occur. A recent addition to the Tariff-Tracking project is market offers available to new solar customers. The workbook allows users to calculate annual bills based on retailers’ rates, feed in tariffs offered and additional discounts. Again, the user can enter consumption level as well as choosing to run the bill calculation based on 1.5 kW or 3 kW solar systems. We have developed five workbooks that allow the user to enter consumption levels and analyse household bills for gas and electricity: Workbook 1: Electricity standing offers July 2008- July 2018 Workbook 2: Gas standing offers July 2008- July 2018 Workbook 3: Electricity market offers 2010 to 2018 Workbook 4: Gas market offers 2010 to 2018 Workbook 5: Solar market offers 2016 and 2018 The five workbooks can be accessed at the St Vincent de Paul Society Victoria’s website www.vinnies.org. au/energy Contents The Victorian Tariff-Tracking Project 4 Key findings 1 1. Changes to the standing offers 3 1.1 Electricity standing offers July 2017 – July 2018 3 1.1 Gas standing offers July 2017 – July 2018 4 2. Market offers 5 2.1 Electricity market offers post July 2018 5 2.2 Gas market offers post July 2018 18 3. Solar offers 29 Methodology and assumptions 29 4. Cost components and bill-stack analysis 38 5. Total cost of energy by area 44 5.1 Inner city, inner North and Eastern suburbs 45 5.2 Inner West and North Western Suburbs 45 5.3 South Eastern suburbs and Mornington Peninsula 46 5.4 Outer Western suburbs and Western Victoria 46 5.5 Outer Northern and Eastern suburbs and Eastern Victoria 47 Key findings • None of the incumbent retailers have gazetted new electricity or gas standing offers since January 2018. Some smaller retailers, such as Alinta, Globird and Powershop have issued new standing offers since then.1 Compared to July 2017, electricity standing offers (single rate) increased on average by 10-16% (depending on network area) and gas prices increased by 5-16%.2 See section 1. • As of July 2018, the average electricity market offer bill for households using 4,800 kWh/annum is $1,585. This is an increase of $35 (or 2%) compared to July 2017.3 For gas, the average market offer bill for households consuming 63,000 Mj/annum is $1,550. This is an increase of $55 (or 4%) compared to July 2017.4 See section 2. • Households with typical electricity consumption can save up to $2,110 - $2,675 per annum (depending on their network area) if switching from the worst standing offer to the best market offer.5 See section 2.1. • The difference between the best and the worst market offers ranges from $700 per annum (in Citipower’s area) to $960 (in Ausnet’s area) for customers with typical consumption levels.6 See section 2.1. • Tango Energy’s market offers produce the lowest annual bill for average consumption households in all network areas except Ausnet where Sumo Power’s offer produces the lowest bill.7 We do note, however, that Sumo’s standing offer (in the Ausnet network) produces the highest annual bill while their lower market offer rates, as well as very high time on pay discount, produces the lowest market offer bill. It is unusual that the retailer with the most expensive standing offer has a market offer that produces the lowest bill in the same network area. See Chart 10 in section 2.1.1. • Dodo has the most expensive market offer three out of five network areas.8 See section 2.1.1. • The ‘big 3’ retailers (AGL, Origin and Energy Australia) now also offer products without conditional discounts and with fixed rates (for a limited time) and these offers produce lower annual bills compared to their pay on time discount products. See section 2.1.1. • Gas customers with typical consumption (63,000Mj) can save up to $955 - $1,285 per annum (depending on their gas zone) if switching from the worst standing offer to the best market offer.9 See section 2.2. • More retailers are now offering gas in Victoria and more retailers are offering gas as a stand-alone product (independent of electricity). See section 2.2. • The price-spread for gas market offers ranges from $845 per annum (Ausnet West/Tru West gas zone) to $935 Envestra North/Origin North gas zone) for customers with typical consumption levels.10 See section 2.2. 1 Alinta’s usage charges came down and Powershop and GloBird published gas standing offers as they are new entrants in the gas retail market. 2 Bill calculations based on the incumbent retailers’ average electricity (4,800kWh) and gas (63,000Mj) standing offers 3 Average market offer across all network areas. Market offer bills are based on single rate and include guaranteed discounts and/ or pay on time discounts. 4 Average market offer across all gas zones. Market offer bills include guaranteed discounts and/or pay on time discounts. Dual fuel gas offers are not included. 5 Based on the worst of the retailers’ standing offer (single rate) and the best of the published market offers (including guaranteed discounts and/or pay on time discounts). 6 Households using 4,800kWh per annum (single rate) and all market offer bills include guaranteed discounts and/or pay on time discounts. 7 Ibid. 8 Ibid. 9 Based on the worst of the retailers’ standing offer and the best of the published market offers (including dual fuel offers, guaran- teed discounts and/or pay on time discounts). 10 Households using 63,000Mj per annum. All published market offers (including dual fuel offers, Guaranteed discounts and/or pay on time discounts). 1 • Of the retailers that offer gas as a stand-alone product (i.e. not bundled with electricity), Energy Australia’s market offer produces the lowest annual bill in six of the eight gas zones. See section 2.2.2. • New solar customers with a 3 kW system installed will have an annual bill that is between $825 and $1,030 less (depending on network area) than non-solar customers with the same consumption level.11 See section 3. • New solar customers should not choose retail offers based on Feed in Tariffs (FIT) alone. Households may be significantly worse off on a retail offer with high FIT rates as well as higher usage rates and/or lower discounts. See section 3. • On average, across all five network areas, the estimated retail component of customers’ bills is approximately $770 per annum for standing offer customers, $310 for market offer customers (including pay on time discounts) and $20 for solar customers (including pay on time discounts).12 See section 4. • Dual fuel households in the La Trobe Valley and Sale in the Gippsland region as well as households in Kilmore, Seymour, Violet Town, Nagambie, Wangaratta, Chiltern and Wodonga (Ausnet electricity network and Envestra’s Origin North and Origin South East gas zones) continue to face the highest energy costs in the state (approximately $3,300 per annum).13 See section 5.5.