Since the Finkel review was released late last week, there have been headlines stating that electricity prices would fall if the recommendations of the review were adopted. Here’s a warning: These headlines are misleading. I want to be clear in that I am not in disagreement with the review nor the recommendations put forward. What I take issue with is how they are falsely being framed and fed into mainstream media.
I’m going to just let the chips fall on this one. Alas here’s a more accurate headline:
“Despite Finkel’s Recommendations, Prices Will Still Rise for Most”.
The review actually states that relative to ‘Business as Usual’ (the ongoing and unchanging state of the energy market operating within the present policy vacuum), wholesale electricity prices can somewhat improve from a forecasted ‘worst case scenario’, provided Finkel’s recommendations are adopted. But here’s the catch: prices for most will not be lower than what we’ve seen to date. Because despite Finkel’s recommended solutions, we’re continuing to operate within the existing policy vacuum. Which is pushing prices up.
Additionally, many businesses and residential users have not yet felt the full impact of the increases we have had over the last 12-18 months in the Wholesale market. These increases will filter through over the next year or so as larger businesses re-contract and as retailers adjust their pricing for other users.
Some of this we are already starting to see with retailers announcing significant increases in pricing for residential users and small businesses from the 1st July. Ouch.
In short, for most us, prices are likely to go up before we experience any relief produced from Finkel’s recommendations.
To learn how you can mitigate the full impact of rising energy prices on your business, contact Rod Boyte at Smart Power today.