Coronavirus shutdowns, renewables drive low wholesale power prices

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Gas and electricity prices remained low over the past quarter amid reduced energy demand due to the coronavirus pandemic.

Wholesale prices have been falling across the nation following an influx of cheap renewable energy into the grid, a slump in domestic power demand as offices, small businesses and factories temporarily shut, and reduced international demand for Australia's gas exports.

Gas and electricity prices remained low over the past quarter.

Wholesale gas prices in the three months to September 30 remained around the previous quarter's $4-$5.50 a gigajoule, the Australian Energy Regulator said – levels that previously hadn't been seen since early 2016.

Wholesale electricity prices were as much as 48 per cent lower than the same time last year. Across the market, it was the first time since 2014 that third-quarter prices were below $55 per megawatt hour in all regions.

AER chair Clare Savage said the figures were "good news" for consumers and showed power outages were not expected by the market in coming months.

"Sustained low wholesale electricity prices translate over time into lower retail prices for businesses and households," she said. "Looking forward, falling contract prices for the coming summer reflect market expectations that there will be enough supply to meet summer demand in the first quarter of 2021."

Average retail prices across the national energy market are down 3.5 per cent for residential customers and 1.5 per cent for small businesses compared to this time last year, according to an October report by the competition watchdog.

Energy Minister Angus Taylor said any reduction in energy prices across eastern Australia was "welcome relief" during the current economic downturn.

"With wholesale prices making up around a third of retail energy bills, the government expects falling wholesale electricity prices to be passed on to consumers. The government's big stick legislation will ensure this happens," Mr Taylor said.

The government last year brought in laws to penalise energy retailers if they don't pass on wholesale price falls to consumers.

The AER said Victoria and South Australia experienced several periods of very low day-time demand in the past quarter due to increased rooftop solar installation.

Coal-powered electricity continued to be offered at low prices, driven by lower fuel prices and increased competition from cheaper gas-fired generation and renewables, the regulator said.

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