Residentialelectricitypricetrends2024AustralianEnergyMarketCommissionNovember2024Contents2RESIDENTIALELETRICITYPRICETRENDS|November2024Introductionandpurpose|Slides3–613452Executivesummary|Slides7–967Nationaltrendsinelectricityprices|Slides10–12Scenarioresults|Slides13–16HouseholdEnergyWalletanalysis|Slides17–23Policyimplications|Slides24–26Jurisdictionalresults|Slides27–33Electricitycostcomponents|Slides34–378IntroductionandpurposeAustralianEnergyMarketCommissionNovember2024PriceTrends2024Thissectionexplainsthepurposeofthisreport,howithaschangedfrompreviousPriceTrendspublications,andsummarisesourmethodforestimatingelectricitypricesandhouseholdenergycosts4RESIDENTIALELETRICITYPRICETRENDS|NOVEMBER2024ProvidinganoutlookofresidentialpricesoverthenextdecadeThisreportprovidesa10-yearoutlookofresidentialelectricitypricesintheNationalElectricityMarket(NEM)asawholeandbyeachjurisdiction•Wemodeleachcomponentofelectricityprices–wholesale,network,renewable/energyefficiencyschemes,andretailcosts–usingthegenerationanddemandprojectionsfromthemarketoperator’s(AEMO’s)latestsystemplan.•Fromthisanalysisweidentifytheoveralltrendsandcostdriversofpricesoverthenext10years.•Wealsomodelanumberofscenariosoutsideofourcentralcasetohighlightthepotentialimpactofrisksanduncertaintiestoelectricityprices.•Theelectricitypriceoutlookisusedtoprojecthouseholdenergyexpenditure(the‘EnergyWallet’)underdifferentlevelsofelectrification.•Wepreviouslyproducedathree-yearforecastofelectricityprices.A10-yearoutlookreducesthepotentialforconfusionwiththeAustralianEnergyRegulator’s(AER’s)DefaultMarketOffer,ismorerobusttoshort-termmarketvolatility,andprovidesmorescopeforusefulinsights.•Thepurposeofprovidinga10-yearoutlookforresidentialelectricitypricestoconsumers,policymakersandtheindustryisto:oPromotetransparencywithapubliclyavailableandtestedpriceoutlookwhichdocumentsthemethodandassumptionswehaveused.oShowwhichcostdriversaremostinfluentialtohelppolicymakerstargetthemosteffectivepoliciestoachieveaffordableelectricity.oProvideconsumerswithanunderstandingofhowtheirdecisionsaroundelectrificationcouldinfluencetheirtotalenergyexpenditure.•Wealsoidentifyspecificpolicyimplicationsresultingfromtheoutlook.•Theseresultsshouldbeinterpretedasaprojectionbasedoncurrentdataandassumptions–inreality,pricesmaymateriallydifferfromthisoutlook.BACKGROUNDPURPOSE5RESIDENTIALELETRICITYPRICETRENDS|NOVEMBER2024ResidentialelectricitycoststackbyNEMjurisdictionovertimeWemodelledeachelectricitycostcomponentA10-yearresidentialelectricitypriceoutlookisestimatedbymodellingeachcostcomponentwithpublicinformation,includingAEMO’sIntegratedSystemPlan(ISP),anddevelopingin-houseassumptionsforfuturecostsandmarketbehaviour.WeidentifiedtrendsandfindingstoinformdecisionsbyconsumersandpolicymakersEstimatedbysimulatingwholesaledispatchoutcomesoverthenext10years,usinggenerationanddemandassumptionsfromAEMO’slatestsystemplanandapplyingarepresentativeretailer’shedgingpositions.DistributionandtransmissionnetworkcostsareprojectedusingtheAER’srevenuedeterminations,forwardlookingcostestimatesfromarangeofsources,andestimatingcostrelationshipsbasedonhistoricalcosts.WHOLESALECOSTSThereareadditionalcoststhatmakeuparesidentialelectricitycoststacksuchasrenewable/energyefficiencyschemes,retailercostsandotherminorcostssuchasmarketfeesandancillaryservi...
