So what is happening in the electricity market right now, and what does it mean for our customer members? Below we have an explainer current for Thursday 16th June 2022.
First, retail prices will be going up in July as they will be for most consumers. And we will let you know the details as soon as we know as a cooperative. We think the offer will still be competitive and want to keep growing.
Wholesale electricity prices started going up this year (including for gas) as fossil fuel and big energy corporations attempted to make as much $$$ as they could out of the war in Ukraine. Other factors include aging coal fired power plants suffering breakdowns, the climate fuelled flooding of coal mines, a lack of consistent federal energy policy for a decade, and tying domestic gas pricing to the global market. This global gas market isn’t neutral either. Fossil fuel corporations, desperate to maintain profits, aggressively promote gas as the “bridging fuel” for energy transition, seeking to lock in emissions and costs for decades.
The AGL share price is up 46.42% over the last six months. Origin is up 16.87%. For context, the ASX overall is down 15.57% over the same period. Some smaller retailers who rode the wholesale prices to offer lower prices to their customers were exposed and started to offload customers.
The Australian east coast energy system was a public good that was turned into an artificial and complex market from the 1990s. As wholesale prices shot up it led to some perverse behaviour.
Earlier this week there were reports large-scale generators pulling supply at key moments.
On Tuesday AEMO sent a letter to the big generators telling them to knock it off. On Wednesday, AEMO then suspended the market to guarantee supply. We don’t know how long this suspension will last for but it could be more than a few days.
What does this mean for our customer members? Firstly, despite all of the noise your electricity supply is secure. Secondly, in terms of pricing the good news is that wholesale prices are only one factor in your bill. Network costs, the costs of running a retailer and advertising (that’s where our revenue comes from) also form part of the bill.
Importantly, we don’t profit from wholesale energy prices.
Also super relevant to pricing is the fact that most of the power we sell from our retail partner Energy Locals is from renewable sources. In addition, Energy Locals have done a good job of shielding our customer members from risk in a volatile market.
Nonetheless wholesale prices will increase retail prices, and every July Energy Locals update their pricing but when we know what that looks like every single customer member will get plenty of notice.
Every person should check whether they are eligible for payment assistance. It can be complex at times and it’s different depending on what state or territory you live in. This is a handy resource to check what you might be eligible for.
So what more can we do? The thesis for our existence is that the electricity market is fundamentally unfair and that it’s not possible for people to generally beat the market so we need to bring energy into the commons.
We need to build a strong collective to demand immediate political action to hold rent-seeking fossil fuel corporations to account and enable social ownership for an electricity system that works for people and the planet, not corporate profits.
Additional solidarity/hardship for our customer members will be a proposal for our democratic budget, and the CoPower Board will actively monitor the situation to see whether we need to pull down any marketing spend and redirect it towards more solidarity.
The best thing we can all do is to organise collectively to change the terms of the market.
We’ve taken this update from a Twitter thread we drafted up for customer members earlier in the week.