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Why are prices changing?

At Powershop, we’ve managed to avoid a price rise for the majority of our Victorian customers for almost two years. However, the wholesale and network costs for electricity and gas have increased significantly during this time and we’ve had to make the hard decision to review our pricing to reflect these higher costs.


Why are Victorian energy prices changing?

Wholesale costs
The cost to purchase electricity and gas from wholesale markets has increased and the market expects this to continue in 2020. Many factors have driven up wholesale costs, including perceived risks of generator outages, higher wholesale gas input costs for some generators, the impact of drought in NSW on hydro generation capacity and extended periods of peak demand due to extreme weather events.

Network costs
Network costs for retailers to access the network to transmit energy to households and businesses via poles and wires have increased across all distribution zones in Victoria. The Australian Energy Regulator (AER) regulates network charges and has approved higher network tariffs for 2020.


What does this mean for your energy bill?

From 1 January 2020, Powershop’s energy prices are increasing for our Victorian customers. Despite the significant changes in the energy sector, we’ve done our best to limit this price rise. We estimate the new rates will increase the annual average Powershop residential electricity bill by around 4%.


FAQs

Energy prices go up and down depending on what’s going on in the industry. Changes in the market impact all parts of the supply chain, from generation to getting it to your door.

Some reasons the price of energy has changed over the last few years include:
  • increased network and metering costs (the poles and wires that get energy to your door);
  • expanding the export of Australian gas, pushing up local gas wholesale prices which are a key input cost for some generators;
  • the retirement of large, old coal-fired power stations reducing supply and creating instability in the market; and
  • energy policy instability, especially regarding renewables, which discourages investment in new development.
There are changes happening in the market now that we think will help reduce the cost of energy (making it more affordable for consumers) and create a cleaner energy system overall, including:
  • increases in the number of properties with small-scale solar systems, making consumers less reliant on the energy grid;
  • increases in large-scale renewable energy generators adding supply to the energy system;
  • developments in large and small-scale battery technology allowing market players to better manage peak demand events;
  • innovation in energy technology, helping consumers better manage their energy costs and create more energy efficient homes; and
  • demand response programs like Powershop’s Curb Your Power which support supply reliability and price stability.

There are lots of ways Powershop works to make energy more affordable for customers and to help protect our environment. Our team is available to have a chat about how you can save money on your energy bills. By looking at your usage history and usage heatmap in your account, the team can provide insights to help you reduce your bills.

Here are just some of the ways we’re helping to keep energy bills more affordable and cleaner:

  • In early 2018, Meridian Energy Australia (our parent company) acquired three hydro power stations to add to our two existing wind farms. This helped us to pass on a price reduction to the majority of Victorian customers in March 2018. We’re committed to using our investments in renewable energy to benefit our customers.
  • The Powershop app and online tools gives our customers insight into their own energy usage. This empowers household and business customers to make educated decisions about their usage behaviour as well as the energy usage of their appliances, supporting them to take control of their bills.
  • Our demand response program, Curb Your Power, helps reduce demand on the grid during periods of peak energy demand, which aims to improve grid reliability and lower peak wholesale prices. Curb Your Power offers financial rewards to customers who reduce their usage during peak demand events and aims to educate customers about their usage and the broader implications on the energy market.
  • Helping business customers with a dedicated account manager to better manage their energy costs, with customised offers to better suit their load and usage behaviour.
  • Powershop offsets 100% of the carbon emissions associated with our customers’ electricity and gas usage at no cost to customers. We do this because we want our customers to have the choice to support a cleaner power company, without having to pay extra for it. Thanks to our customers, we’ve offset over 1.8million tonnes of carbon! That’s the equivalent of the annual carbon emissions from 1.5 coal-fired power plants (calculated here).

We anticipate other Victorian retailers will also increase their energy prices from 1 January 2020.

From 1 January 2020, the Victorian Default Offer (VDO) for residential consumers is increasing by 7.8% and [%] for a typical small business consumer. This price is independently set by the Victorian Essential Services Commission (ESC), who have commented that “although a number of components in the cost stack have increased, wholesale electricity prices and network costs are the main drivers of change in the VDO to apply from 1 January 2020.”

We have done our best to absorb market cost increases through other cost efficiencies and limit this price rise to the average residential Powershop energy bill by approximately 4% annually.

Please give us a call if you find competitive rates with another retailer and we can provide a detailed rates comparison, including discussing the details of the plan to find out how it really stacks up.

Here’s a blog post with some tips and tricks on how to compare offers. It can be quite confusing, so take your time and don’t assume lower rates means a lower bill.

There are lots of ways Powershop works to make energy more affordable and reliable, and provide cleaner energy solutions for our customers. Our team are always around to have a chat about how you can save money on your energy bills as well. By looking at your usage history and talking you through your usage heatmap in your account, the team can provide knowledge and usage insights to help you reduce your bills. Here are just some of the ways we’re helping to keep energy bills more affordable and cleaner:
  • In early 2018, Powershop and Meridian Energy Australia (our parent company) acquired three hydro power stations to add to our two existing wind farms. This allowed us to pass on a price reduction to almost all our Victorian customers in March 2018. We’re committed to using our generation assets for our customers good.
  • The Powershop app and online tools gives our customers insight into their own energy usage. This empowers household and business customers to make educated decisions on their usage behaviour as well as efficient appliances, supporting them to take control of their bills.
  • Our demand response program Curb Your Power, helps reduce demand on the grid during peak demand events, which in the long term increases grid reliability, reducing wholesale prices. This program offers financial rewards to participating customers and aims to educate customers about their usage and the broader implications on the energy market.
  • Helping business customers with a dedicated account manager to better manage their energy costs, with customised offers to better suit their load and usage behaviour.
  • Powershop offset 100% of the carbon associated with our customers’ electricity and gas usage at no cost. We do this because we want our customers to have the choice to support a cleaner power company without having to pay extra for it. Thanks to our customers, we’ve offset over 1.8million tonnes of carbon! That’s the equivalent of preventing 1.5 coal-fired power plants from running for one year in carbon emission reductions.

The benefits of being with Powershop

We promise we’ll continue to work hard to keep our prices as competitive as possible, to keep giving you great customer service, energy tools and technology to monitor, understand and modify your usage, and to keep supporting Australia’s environmental future.

Our mission to be a better power company that’s working for a cleaner, greener future for Australia. Our parent company, Meridian Energy Australia, aims to generate more renewable energy than our customers use. This means as Powershop’s customer base grows, Meridian Energy Australia is able to further invest in renewable energy. So, every Powershop customer can know they’re supporting a cleaner, greener and better future for Australia.

This year, we were also a founding signatory of the Energy Charter in Australia, committing to work together with other energy businesses across the supply chain to create better outcomes for customers.


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