Carbon price fall expected to moderate power bills
The anticipated decline in the carbon price is expected to take the sting out of the recent sustained upswing in electricity prices, with the household electricity bill forecast to rise over the next few years at less than the rate of inflation.
The forecast, by the Australian Energy Markets Commission, which oversees the energy markets, anticipates the decline in the carbon price from about 2015 will put downward pressure on household power bills.
It forecasts that the price of power will rise by an annual average of 1.2 per cent a year between 2012-13 and 2015-16.
"Nationally we see falling pressure on prices coming from two areas - stabilising regulated network costs and changes in carbon pricing costs," the chairman, John Pierce, said.
However, this will mask considerable variation between states, with prices in NSW forecast to decline by an annual average of 0.7 per cent over this period.
Prices in Victoria were forecast to be flat, which would also be the case in Tasmania and Western Australia, it said.
In Victoria, prices were expected to increase at less than the rate of inflation during the four years to 2015-16.
The main impact on prices would be rising outlays to upgrade the power network, which have been approved as a result of already approved spending plans that continue until the end of 2015.
Queensland would see sustained price rises, averaging 8.6 per cent over the next three years, because of a large planned upgrade to the power network in that state, the forecast said.
The main driver for the forecast large price rises in Queensland is a "catch-up in underrecovered costs associated with the closed Queensland Solar Bonus scheme", the commission said.
Similarly, it said, in the Northern Territory prices were expected to rise a sharp 6.9 per cent annually over the next three years.
Wholesale power prices were expected to show only a minor increase, thanks to relatively stable demand expected over the decade ahead after power demand declined by an annual average 1.2 per cent over the past five years.
The foreshadowed decline in the carbon price from 2015 would reduce household electricity bills by about 4 to 5 per cent in most states in 2015-16.
The commission forecast is based on the previous federal government's policy, which predicted a fall in the carbon price from 2015.
It does not reflect the Abbott government's planned axing of the carbon price, which has yet to be legislated.
In most states, environmental policies such as the effect of the price on carbon and other renewable energy policy programs add about 17 to 19 per cent to electricity bills.
The cost of transporting electricity from the power station to the user makes up about 40 per cent of the bill, with little change expected.