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Energy market report highlights sector challenges

The Australian Energy Regulator today published its tenth annual State of the Energy Market report, highlighting the changing dynamics across the entire energy sector.

“For ten years, the AER has reported to policy-makers, industry and the Australian community on the state of the energy market,” AER Chair Paula Conboy said.

“Our report draws together data and analysis to illustrate key trends and drivers of change in the energy industry, as well as current challenges and how stakeholders are responding,” she added.

The report provides independent and reliable information on what’s happening in Australia’s wholesale electricity and gas markets, the transmission and distribution networks and the rapidly evolving retail sector where customers, now more than ever before, can take greater control of their energy usage and bills.

“The last eighteen months have been some of the most challenging Australia’s energy sector has experienced since the National Electricity Market was established almost 20 years ago,” Ms Conboy said.

The 2017 report shows wholesale gas and electricity markets are becoming increasingly interdependent, with high gas fuel costs contributing to higher electricity prices. Supply and demand in the market is tightening, with the retirement of some coal generators. Changes in the eastern gas market are highlighted along with the range of market, government and regulatory responses prompted by concerns of possible supply shortfalls.

“Our monitoring role means we are well placed to report on the sector. New functions to monitor and report on the competitiveness of the National Electricity Market will provide additional oversight,” she said.

“Growing investment in renewable generation is requiring a greater understanding of the services needed to support power system security, the focus of much work across the sector,” Ms Conboy said.

“It is vitally important market arrangements continue to evolve and adapt as the energy sector transitions,” Ms Conboy said.

The report also shows the impact rising wholesale gas and electricity costs are having on retail prices. Although these are being partially offset by lower network costs, electricity retail prices trended higher in 2016, except in Victoria, with the sharpest rises in NSW and South Australia.

“Consumers now have access to an increasing range of choices, including smart meters, to better understand and manage their energy usage,” said Ms Conboy.

“Concerns about retail energy markets are being examined. But we already know around half of Australian energy customers have not switched providers in the last five years, and we also know that shopping around is one of the best ways to save money on your bill.

“We encourage consumers to visit our independent price comparator website, Energy Made Easy, to help find a better energy deal,” Ms Conboy said.

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