Newly sworn-in Treasurer Jim Chalmers has enlisted the Australian Competition and Consumer Commission (ACCC) in its fight against record energy prices pressuring Australian households.

In a public letter to the watchdog, Dr Chalmers expressed “deep concern about significant increases” in wholesale gas and electricity prices – and the impact it was having on voters’ hip pockets.

Consumers have been warned to brace for higher energy prices this winter as a confluence of factors (both global and domestic) push up wholesale prices and reduce the supply of fuels.

In a drastic example, small power company ReAmped Energy is even encouraging customers to switch to other providers now to lock in better deals, cautioning that those who stay will be stung by sizeable increases in their bills as the company struggles to keep its costs down.

Dr Chalmers said the ACCC plays a crucial role in keeping prices in check, and requested the watchdog make sure the underlying factors driving these price hikes are fully transparent.

The Treasurer also asked the ACCC to flag with the government any prospective regulatory changes which, if enacted, could keep a lid on prices, as well as investigate any claims of “anti-competitive or false and misleading conduct” in energy markets, and act where appropriate.

Shortages, ageing generators weigh on prices

Dr Chalmers’ letter comes as the east coast of Australia shivers through a cold snap that has sent demand for energy skyrocketing.

At the same time, energy providers (notably Origin Energy) have struggled to secure enough fuel and are paying more for what they can get, mostly due to global shortages triggered by Russia’s invasion of Ukraine.

Higher global prices for oil and natural gas translate to higher domestic prices for Australia, too, given the majority of fossil fuels produced here are destined for export, forcing local companies to pay globally competitive prices.

In Victoria, these challenges have seen the wholesale gas prices surge from $10 per gigajoule at the start of the year to roughly $800 per gigajoule at the start of June – forcing the Australian Energy Market Operator to step in and cap pricing at $40 per gigajoule until 10 June.

More broadly across Australia, energy generation costs are currently sitting 115% above previous record highs, while electricity contracts for next financial year are trading at prices 180% higher than at the start of this year.

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Sources:

• Twitter, Jim Chalmers MP Tweet 6 June 2022 
• The Conversation, Why did gas prices go from $10 a gigajoule to $800 a gigajoule? An expert on the energy crisis engulfing Australia
• The Conversation, Australia’s energy crisis: 3 ways the Albanese government can ease pressure on your power bills