If you’re reading this, chances are you’ve received an email from us telling you the price you pay for electricity in Victoria is increasing. We know that isn’t great news, so we’ve put together this information to help you understand why it’s happening.
Hazelwood Power Station closure
The recent announcement of the closure of the Hazelwood Power Station (Hazelwood) has had a significant impact on forward wholesale electricity prices, causing them to increase (and in turn, the price you pay for electricity is increasing).
This is the most significant change in the Victorian electricity market since privatisation in the late 1990s. Hazelwood is the lowest cost generator in the entire National Electricity Market (NEM), and the dirtiest, producing about 10.3 TWh of electricity per year.
The withdrawal of Hazelwood’s 1,600 MW generating capacity will change the dispatched energy outcomes across the whole NEM. Currently, we don’t know exactly how the closure will impact the spot electricity market and we probably won’t know until around April 2017.
It’s expected that the loss of supply of electricity from the closure will be made up from both Victorian and interstate generation sources. The impact of sourcing energy from interstate will likely cause the Victorian wholesale price to move toward that of NSW, because the new energy will come from higher-priced sources, such as black coal, gas and hydro.
What does this mean for you?
For electricity consumers in Victoria this means that what you pay for electricity is going up, and it’s most likely going to be the same across the industry no matter which retailer you’re with.
The reality is, wholesale energy costs are a major component of what customers pay, so when they increase, unfortunately we have to pass that on to our customers. We will always limit the impact as much as we can, and we pride ourselves on remaining one of the most competitively priced retailers in NSW and VIC.
You can see below how this price change is likely to affect different sized households.
It’s not all bad!
If you have solar at your home or business, you’ll now receive 8.2c/kWh from Powershop for the power you generate.
We’re paying more for electricity from the wholesale market, so we’re paying you more for your solar generation.