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Let’s discuss what’s been happening in the energy market in the past quarter.
The Australian energy market continues to be volatile and complex – with prices changing daily. This year’s continuation of higher-than-average energy prices is troubling Australian businesses, big and small.
So how did the energy market stack up in Q1?*
- Large Market Electricity Contracts: Rates consistently dropped in January and February, particularly in Vic and SA where rates returned to pre-covid average levels. While rates also dropped in NSW and Qld, the short-term market continued to show some volatility however, 2024 and 2025, remained lower. This was due to grid stability from traditional energy sources as well as renewable energy sources. Volatility returned last week after several hot days in Qld and NSW which started to push prices up.
- On Monday (27th March), the energy market woke up to the news that one of the co-owners of the Callide C power station had gone into receivership. As a result, that market saw some bounce and many of the major retailers withdrew their offers. Government owned CS Energy, who owns the remaining 50%, is currently operating the power station.
- Large Market Gas Contracts: the dominant theme for gas in Q1 was the expectation that energy users would be able to take advantage of $12/GJ gas offers in the market following the Federal Government’s announcement on 23 December 2022 capping prices on coal and gas for 12 months. (This applied to uncontracted gas representing 3% of the market). Unfortunately this led to tightening of supply which meant that most retailers were unable to provide any pricing.
- Small Market (SME) Gas and Electricity rates: Many retailers will review their rates next quarter and you may have received a letter informing you of a rate change, however, your discount will remain unchanged.
What to expect in Q2:
- Liddel Power Station (NSW) is scheduled to close in April 2023. Liddell is the 3rd largest power station in the National Energy Market. Further volatility is expected for winter 2023, however, it is anticipated that two new gas-fired peaking projects in New South Wales, Snowy Hydro’s Kurri Kurri (aka Hunter Power Project) and Energy Australia’s Tallawarra B may come online in time for Summer 2023-2024 as dispatchable capacity.
- Retailers to resume gas pricing. From what we’ve seen this week, offers are below $20/GJ compared to last year’s record highs where gas prices were between $25-$40 depending on location. Large gas users need to be mindful that the cap is only in place until Dec 2023.
*Disclaimer: This article is general information only and does not constitute financial advice. Electricity and gas commodities are volatile markets and prices vary daily.
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