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Higher electricity bills on the way

AAP logoAAP 14/12/2016 Belinda Tasker

WHY ARE PRICES GOING UP?

* The closure of two major coal-fired power stations is driving wholesale electricity prices higher, which will flow on to residential power bills

* South Australia's Northern power station closed in 2016

* The Hazelwood power station, which provides about a fifth of Victoria's electricity, will close in March, 2017

* The closures come as more solar and wind power becomes available. The change in energy mix is causing greater variation in electricity bills, depending on where you live and how much power you use

* Wholesale prices have been held down in recent years because of flat demand and an oversupply of generation

* But as coal-fired power stations close, electricity supply shrinks and prices rise

* Electricity usage also plays a role, with Tasmania's consumption level twice that of Victoria

HOW MUCH EXTRA YOU'LL PAY IN 2018/19 AS A RESULT OF HAZELWOOD'S CLOSURE

* Tasmania $204

* South Australia $150

* Victoria $99

* NSW $74

* ACT $45

* Queensland $28

CHANGE IN GOVT POLICY

* The federal government's Large Scale Renewable Energy Target (LRET) environmental policy is also having an impact as it requires electricity retailers to source some of their electricity from renewable sources

* As a result, there has been more investment in wind and large-scale solar generation which in the past accounted for only a small fraction of total electricity supply but now is growing

* But increasing the proportion of intermittent generation can increase price volatility as the market responds to high and low periods of supply

(Source: Australian Energy Market Commission 2016 Residential Electricity Price Trends report)

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