Lock in reasonable energy rates while you can – Victorian electricity prices could be about to skyrocket

Wholesale electricity prices are going through the roof and hitting record highs in New South Wales and Queensland. 

Prices in Victoria are still relatively stable in comparison but they could continue to follow their current trend higher.

Victorian futures prices are still below $70/MWh compared to the northern states which are trading as high as $130/MWh.

You can sign a new electricity contract that has a start date months or years in the future, even if you are already under contract.

The longer you wait to secure your next contract, the more you are exposed to volatile electricity prices. Market timing is key to getting a great deal.

NSW and QLD recording record highs

The price of electricity rarely moves in a straight line. Just one year ago when the country was in the grip of a Pandemic driven lockdown, prices bottomed out to record lows in some states. 

Australia came out of lockdown with vigour and wholesale energy prices ticked up as a result of supply outages and high coal and gas prices. 

As a result of the war in Ukraine, demand for non-Russian coal has seen export shipments leaving NSW fetching up to $564 a tonne compared to $67 a tonne in 2020.  

Another factor at play is Origin Energy’s decision to bring forward the closure of the Eraring power station by seven years to 2025.

With 2,800 MW capacity, the New South Wales coal plant is Australia’s largest. Plans have been announced to build a 700MW battery on this site, but this still leaves a shortfall in supply.

In Victoria, Energy Australia’s 1,480-megawatt Yallourn coal plant will close four years early in mid-2028. 

Yallourn supplies about a fifth of Victoria’s electricity needs. A 300-megawatt battery will be added to the site in 2026.

The situation has been further compounded after AGL Energy suffered an electrical fault at its Loy Yang A coal power station, which supplies about 30 per cent of Victoria’s electricity.

AGL has advised the Australian Energy Market Operator that the outage at the 550MW unit, which went offline last week, may last until August 1, while noting the estimate is “highly preliminary and subject to change”.

What can I do to safeguard my business? 

Prices in the Northern States have doubled in the past year. Businesses could have secured their electricity at $50/MWh during 2020/21 compared to current prices that are in excess of $100/MWh.

Victorian futures prices are still relatively low when compared to NSW and QLD, but it is reasonable to expect that they could follow the trend of the northern states.

By going to the market, businesses can see what retailers are offering and depending on risk appetite levels, they may wish to lock in a rate now.

Don’t miss out on securing a good energy deal

Leading Edge Energy can help guide you to make the right decisions, to help minimise energy price risk moving into the future.

We can also identify other opportunities to make savings such as network tariff optimisation and improved efficiency.

Drop us an email at info@leadingedgeenergy.com.au, contact your Leading Edge energy management consultant or call us on 1300-852-770 for an obligation-free consultation about how you can lock in a future electricity contract or blend and extend agreement.