Why Are SA Electricity Prices So High? (Hint: It’s not what you think…)

* We do not compare all energy providers & have commercial arrangements with our partners.

Electricity Bills | BY Ethan Rodgers


SA electricity prices are so high because of expensive raw materials, government inaction, and big energy ripping you off. 

If you’d like to find a better deal, one of our best deals in SA offers a price $225 under the statewide average we’ve calculated. 

If you’ve got questions about why your bill is so big, or what to search for a better option, place your details in the form above or call us on 1300 232 848.  

In the mean time, let’s take a quick look at why SA electricity prices are so high.

Are Renewables to Blame for South Australia Electricity Prices?

South Australia electricity prices

A common argument you might hear is that your electricity prices are high because of the high proportion of renewables in SA’s energy mix.  One thing that is true is that South Australia does have a very high renewable quotient, at over 50% of total electricity generated

However, it is not true that it’s renewables that are driving up prices, despite what you may hear. The explanation gets a bit complicated so bear with us for a minute. Energy retailers, such as Origin Energy, AGL, Alinta Energy or Simply Energy, purchase electricity from generators on what’s known as the “Wholesale Electricity Market”. The generators offer a price for the electricity they’ve made, and retailers purchase the electricity at that price. 

According to one examination, the renewables industry consistently offered their entire energy output for less than a single dollar, only for it to be purchased at the same rate as the traditionally generated electricity. If this is the case, then the mere existence of renewables can’t be what’s causing the high prices. 

Is it wholesale prices then?

SA electricity prices wholesale

It seems obvious, but is it though? A cursory look at the past few years seem to paint that picture. According to the ACCC, from 2007 to 2016, wholesale costs actually dropped by about 30 cents/kWh. However, once 2017 rolled around, the estimated wholesale price of electricity jumped by a whopping 6 cents/kWh.

At the start of 2018, it was estimated by the AEMO that South Australia had wholesale electricity prices that were 66% higher than any other state in Australia. High wholesale costs get passed onto the consumer as the retailers purchase the electricity with a profit motive in mind. 

So is it the wholesale prices? Maybe not. Victoria has much cheaper electricity prices than South Australia, but as of Q1 2019, their wholesale price is not too far behind South Australia’s. What we really need to look at is what is driving these high wholesale costs, and how South Australia’s unique situation is causing its high prices.

One of the biggest factors is something you might not have thought about too much… it’s the price of gas. 

So what’s going on with the cost of gas?

SA electricity price gas

The gas industry in South Australia hasn’t been having the best time of late. Between 2015 and 2017 the price of gas nearly doubled. What happened was there was a surplus in electricity supply for a good long while, but when a number of large plants closed there was a sudden lack of supply.

With supply reduced, the generators had to make up for the loss in profits somehow, so they jacked up the price of the electricity they did have.

Prices quickly rose, and those costs were passed on to consumers like you. This is particularly impactful in South Australia. Why? Because more than any other state South Australia is most dependent on gas. 60% of the natural gas in the state is used to generate electricity according to the South Australian government.

That brings us to the second component in how gas prices have driven up SA electricity prices. With the price of gas being so high, input costs in generating electricity shot up and again the generators passed these costs onto the retailers, who in turn passed it on to you. 

What can I do about high prices in SA?

So, it’s easy to think, given the tools in place that have raised your power bill, that there’s not much you can do about it.

However there is one thing you could do; that is to speak to a professional, and here at Electricity Monster, we’re just the professionals you need.

Electricity Monster offers a 100% Free Service, to both families and businesses, where we help you search for a better deal on your electricity.

We’ve got some extremely competitive deals on offer in South Australia, from well-known retailers like Alinta Energy.

If you’re interested in searching for a better deal, just submit your details in the form below, or call us on 1300 232 848. Our service takes as little as fifteen minutes, and we handle all the paperwork. 

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* We do not compare all energy providers & plans in the market due to commercial arrangements.

Disclaimer:

Disclaimer:

This publication contains an estimate of how much you could save with one of Electricity Monster’s partner retailers, namely Powershop and their Powershop Shoppers plan. The $225 estimated savings are based on information in the Powershop review, which is in turn based on their own state rates, AER Data and our own calculated statewide average price. For further information consult our Powershop review

Important points to note are:

  • We do not guarantee that the information provided applies to every household in Australia.
  • Significantly, all dollar figures are including GST.
  • Rates are accurate as of May 22, 2019.
  • Specifically, electricity comparisons are on the peak rates in single rate plans, plus their daily electricity supply charges.
  • Similarly, gas comparisons are on the first tranche of usage charges, plus their daily gas supply charges. 
  • Accordingly, electricity rates used are from the retailer website. We have not verified their accuracy.
  • Chiefly, electricity and gas benchmarks used for the average energy usage of households are from the AER website.
  • For SA, the SA Power Networks distributor has been used across all electricity retailers.

Updated by Ethan Rodgers

Ethan Rodgers

Ethan Rodgers is an energy journalist with a passion for how the electricity industry affects regular people. His key areas of interest are the energy poverty crisis and inner workings of each state’s electricity situation.