The Price Of Electricity Is Astronomical In The Heatwave. The Good News Is Your Power Company's Picking Up The Tab

Port Phillip Bay is much cheaper than air conditioning… Melbournians cool off during the heatwave on Tuesday. Getty/Craig Sillitoe

The temperature isn’t the only thing soaring as a heatwave sweeps across southern Australia.

Yesterday, as people turned on their air conditioners and demand peaked around 6pm, the spot wholesale price of electricity in Victoria jumped from $87 per megawatt hour to a staggering $1889 at 7pm – a rise of around 2000 per cent.

By 7.30pm, the price dropped back to $107.

The average daily price (AVD) for one megawatt of electricity in Victoria was $175 yesterday. On Monday it was just $46.

You can see the heatwave hit South Australia’s AVD too: Sunday $55, Monday $137, Tuesday $268.

With data from the Australian Energy Market Operator, here are the the average daily prices for power, measured in megawatt hours, on the energy market since January 1. You can see the effect of Queensland’s heatwave earlier in the month too:

Fear not, you won’t have to pay any more on your electricity bill: your retailer took the hit (and most likely is hedged against the price spike) while the power stations made a motza – for a few minutes at least.

But as reported last week, we’re already paying more for using less electricity.

The good news is that in its final report on residential electricity price trends, released in mid December, the Australian Energy Market Commission (AEMC) said that it expects prices rises to moderate over the next three years, to an average of 1.2% a year, which is below inflation.

The AEMC puts it down to “stabilising regulated network costs and both upward and down pressure from the costs of different government environmental policies”.

They estimate environmental policies, such as the carbon price and solar bonus schemes, account for 17 per cent of the price of electricity. While noting the federal Government’s plans to remove the carbon price, AEMC notes that plan, or a floating carbon price would reduce cost pressures.

Regulated network costs, which make up 50 per cent of the retail price, are expected to rise by 4.6% a year.

The chart below shows how your state fares. NSW and Canberra residents will have cheaper bills. The jump in Queensland is in part due to the state’s premium solar feed in tariff scheme.

NOW READ: 100,000 Victorian properties face power outages because of heatwave

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