Our Energy Market Wraps aim to educate and equip you with the knowledge to navigate the complex challenges of the Australian Energy Market. Our team of experts decode complex market data to deliver cutting edge insights on the commercial energy market in a short consumable video. These insights help you make informed decisions about how to buy and use energy.
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Where were you on Monday, March 22, 2021? Just to remind you, that was World Water Day. Speaking of water, it was a day that was flooding throughout New South Wales in Australia and we had seen the horrific images of a home being swept away through floodwaters of a new honeymoon couple. That's pretty tough news.
Internationally, we had Donald Trump announcing the launch of a new social media platform. That was Monday, March 22, 2021.
But why is it that important? My name is John Huggart I'm the CEO of Energy Action and welcome to the Energy Market Wrap.
This week, here we are, it is June 11 2021, but March 22 2021 was the day to lock in your retail electricity energy contract. How do I know that? It's easy. You look back in the review mirror.
You can check it out on our website energyaction.com.au and if you scroll down a bit you'll see what we call the EAPI, the Energy Action Price Index. It tells you the average price has entered into for large market contracts on our platform over the last 15 years. What you'll see is a graph that demonstrates the low point of pricing was about March 22 2021.
My point to this though is that customers have been the beneficiary of lower prevailing wholesale and now retail prices for the past 18 months since for people coming off now of a contract from about two or three years ago, they're seeing savings on their energy of about 40% and even if you're coming off a contract from the last year or two, it's at least 25% - 28% savings.
During these past few months we've had customers naturally ask “well we've just seen this big saving i imagine it's going to go down further, maybe I should wait? Maybe we should go back to market again? Maybe we should ask the retailers one more time?”
I think the demonstration that the low point of the market was March 22 2021, is the fact that stands behind the advice that we've maintained for a period of time here at Energy Action. That is, the wholesale markets have been unsustainably low and that's led to buying opportunities for contracting and locking in your load right now on really good long-term rates.
If you check out that Energy Action Price Index, you'll see these are the lowest prevailing rates for about seven years now. Could you do better next week with a deal? Could you do better in a month's time with a deal? Yes, you could..
I think that's probably what's attracted some people to wait, however that wait has come at a price. What we've seen now is that the market has met its level of resistance. I'll share with you now some of the graphs which are demonstrating that resistance, and the shock on the market over the past couple of months, seeing that market rebound and reset at new higher levels at the very beginning of the year.
We had the CEO of Origin Energy make quite a profound statement he says these unsustainably low wholesale prices will lead to withdrawal of supply on either a planned or an unplanned basis.
Of course, that's what's happened most recently with an unplanned outage in Queensland with the Calliade Power Station event and withdrawal from supply and that's been a recent shock to the market.
The new shock to the market is demand. It's a really cold day here in sydney. Cold means low digits and that is leading to higher demand outlooks for this winter and that's what's driving this wholesale market, so there's been a bit of a reset.
It's still a great time to lock in your retail contract and that's because these are still at a relative point. Very good value from a long-term comparison point. Many of our customers are locking in these savings and investing in their efforts with renewable energy, so please consider your investment in solar, in green auctions to add value to your portfolio as you move towards net zero.
Let's take a moment to have a look at some of the individual markets and where we're seeing that price resistance and how we've seen the market shape over the last few months now.
Let's have a look at the wholesale market in Victoria. I'm just looking at off-peak and since about that magic March time those off-peak prices have doubled in Victoria. The flat price has been impacted as well, but just think of that a doubling of prices of electricity.
Contracts in Victoria over the past 3 months if we look, as well at Queensland off-peak, sorry the flat price a bundle of peak and peak and a flat price for your load has increased by more than 50%, obviously impacted more dramatically recently with the Callide Power Station outage. Even the trend had been set from that low point in March.
Similarly, if we look to New South Wales, we're seeing the growth in that the increases in those flat prices since March of about 20% - 25%.
We're seeing peak prices in South Australia tripled in cost in the last three months. Now, this is the state famous for its capability in generating renewable resources into the grid but we've seen even during this period a restatement of the market.
The market has met its point of resistance and it's now resettling up. So, what does that mean?
Should you lock in now? Or should you defer and wait and see if the market goes back low again?
Well, our advice generally right now is to lock in these low prevailing rates and lock in rates which are still far lower than they've been for the past several years many of our customers are reinvesting those savings into activities on green.
The investment in renewable energy through our Green Auction platform, Green Power, investment in solar and for more specific or expert advice for consideration of your portfolio please reach out to your account manager.
Our experts here at energy action are here to help make energy simpler cleaner and lower cost.
Thanks for your attention this week, have a good week ahead.