What’s happening with energy prices?

Everyone is talking about the high cost of living pressures and inflation. 

We understand that higher energy prices will put pressure on households and businesses as Australians continue to face broader cost of living pressures. Any decision to change prices for our customers is based on a detailed consideration of a range of factors.
 

What factors impact energy prices?

Here’s what’s happening with energy prices and what we’re doing to support our customers.

Energy prices are impacted by many factors, including:

  • network costs including the poles, wires and pipes used for transmission and distribution
  • wholesale energy costs, which reflect the cost of producing energy
  • environmental certificate costs
  • retailer operating costs and margin.

These costs go into maintaining your energy supply. Network and wholesale costs make up the majority of your energy bill. A smaller portion goes towards retailing, which includes the costs involved in servicing our customers, and environmental certificate costs, which are fees we pay to meet our obligations under schemes such as the Renewable Energy Target.

Wholesale energy costs: What’s happening in Australia’s Eastern states?

In 2022, energy wholesale spot market prices were highly volatile with many instances of extremely high prices.

The wholesale energy price for the 2023–24 financial year is much higher than 2022–23. Wholesale electricity and gas markets underwent many disruptions and shocks in 2022, which flowed through to wholesale energy prices, including:

  • significant increases in coal and gas prices due to geo-political issues, such as Russia/Ukraine, extreme weather events and flooding that disrupted coal supply chains, and elevated international LNG prices
  • reliability issues with fossil fuel fired generation units including sustained and unplanned outages of baseload generation plants

AGL works towards reducing customers’ exposure to the short-term price fluctuations of the wholesale energy market, including managing risk by entering into forward looking contracts to purchase energy.

Still, the significant increases in wholesale prices will be the primary driver of increases that customers will see on their bills from 1 July.

Looking for more information about how energy is priced?

Get a breakdown of the costs of delivering electricity and gas to your home. Visit the explainer on how energy is priced.

What we’re doing about wholesale energy costs in the long term

At AGL, we’re committed to changing with the needs of our customers. That’s why we’re investing in renewable energy plants and energy storage infrastructure to increase long term supply and reliability, and we're always looking for solutions that make energy use more efficient and affordable. See how we’re moving faster towards a cleaner energy future.

Assistance for our customers experiencing difficulty paying their bills

We’re working hard to make energy more affordable for our customers, particularly those struggling to pay their bills. If you need a little extra help paying energy bills, explore our financial support and customer assistance options and the Energy Bill Relief Fund.

What you can do to reduce your energy costs

Here’s a list of ways you can start saving on your energy bill:

We’ve also introduced the Electrify Now pilot program to help customers understand their own energy usage and home upgrade options.


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