VIC and QLD Experience Significant Electricity Price Hikes as AER Reports 26 High Price Events in Q1 2024

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The Australian Energy Regulator’s (AER) latest Wholesale Markets Quarterly Report reveals that seasonal changes and weather-related events contributed to increased wholesale electricity and gas prices during January to March 2024 compared with the previous quarter.

The report also shows that average quarterly electricity prices in QLD and VIC increased by 20% and 9% respectively compared to the corresponding quarter in 2023.

The 2023-24 summer was Australia’s third warmest on record, marked by widespread and persistent heat.

During the quarter, there were 26 high price events, more than double the number experienced in the first quarter of 2023. Of these 26 events, 11 were in QLD and five in VIC.

Average quarterly electricity prices in other regions were between 5% and 16% lower than the corresponding quarter in 2023.

National Electricity Market average demand increased by 9% compared to the preceding quarter and was higher than the three previous first quarters, but lower than the first quarter of 2020.

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National Electricity Market average demand increased by 9% compared to the preceding quarter and was higher than the three previous first quarters, but lower than the first quarter of 2020.

AER Board member Jarrod Ball said weather events played an important role in this quarter’s price outcomes.

This was most significant in northern states, particularly QLD where maximum daily demand exceeded the previous all-time record three times during the quarter.

“Although the summer heat and the power system event in Victoria on 13 February meant that wholesale prices in Queensland and Victoria were higher than the same time last year, all other regions were lower than the first quarter of 2023," Mr Ball said. 

By contrast, in VIC and SA there was reduced demand on the energy grid at times which resulted in first quarter minimum daily demand records, due to the increased generation by rooftop solar systems on sunny yet mild summer days (when air-conditioner use is low).

Average quarterly generation increased from last quarter and was higher than the first quarter of 2023, due to higher demand. Coal, gas and solar generation each increased from the last quarter. 

Forward prices for electricity for the 2025 calendar year fell on average in all regions, with decreases ranging from $1 per MWh (QLD) to $12 per MWh (SA). 

Overall, forward prices for 2024 and 2025 are now well below forward prices seen in 2022, but they are yet to return to historic levels and remain higher than 2020 and 2021. 

“It’s encouraging to see forward prices for electricity fall for the next calendar year, however they continue to be sensitive to market conditions,” Mr Ball said.

Average east coast gas market spot prices increased by 6.9% (to $11.59 per gigajoule) compared to the previous quarter but were 3.9% lower than the same quarter in 2023.

Residential and commercial gas demand was at its lowest first quarter level in a decade, continuing the same trend observed for the previous quarter. Demand from Gas Powered Generators was also at its lowest first quarter level for the past decade despite a 17% increase from the previous quarter.

The lower than usual domestic demand for gas maintained downward pressure on prices, despite a month of reduced supply capacity at Longford, Victoria’s largest production facility.

While liquefied natural gas (LNG) export pipeline flows remained strong across the quarter, international LNG spot prices continued to decline, ending the quarter at $13.72 per GJ, down from $16.38 per GJ the previous quarter. This is one of the lowest prices recorded over the past two years and reflects a combination of high storage inventory levels and reduced demand in overseas markets.

“As we exit summer, domestic gas storage remains high and inventory levels will depend heavily on the weather conditions and winter demand from consumers in the coming months,” Mr Ball said. 

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