Watts News - Big Business Edition - July 2017

Welcome to the first Simply Energy Watts News – Big Business Edition.

This quarterly update is intended to provide you with information on how energy is supplied to you, the factors influencing the energy market, as well as how Simply Energy is listening to customer feedback to improve our service. Engaging and listening to you is aligned to our vision: To be your trusted energy partner providing simple, affordable solutions to enable you to feel more in control of your energy. During the second half of this year, Simply Energy will begin rolling out a series of new products to help our customers use their energy in a smart way, improving their energy efficiency and reduce costs.

We look forward to discussing your energy needs and how we can collaborate to support your business. Should you have any specific queries, please contact your account manager.

 

Power of Choice for consumers

Substantial reforms are under way to the National Electricity Market (NEM) following recommendations by the Australian Energy Market Commission’s Power of Choice review.

The reforms provide opportunities for consumers to make informed choices about the way they use electricity based on the benefits that some services provide. The first wave of changes taking effect from 1 December, 2017.

Highlights:

  • Reform to distribution network pricing principles to improve consumer understanding of cost-reflective network tariffs and to give consumers more opportunity to be rewarded for changing their consumption patterns.
  • Expand competition in metering and related services to all consumers.
  • Provide consumers with better access to their electricity consumption data.
  • Implementation of a framework for open access and common communication standards to support contestability in demand-side participation end user services enabled by smart meters. This will support consumer choice.
  • Introduce a new category of market participant for non-energy services in the National Electricity Rules to enable innovative products to be offered to consumers.
  • Establish a new demand response mechanism in the wholesale market – giving optionality for demand-side resources to participate in the wholesale market for electricity.

https://www.aemo.com.au/Electricity/National-Electricity-Market-NEM/Power-of-Choice

At Simply Energy, we are preparing for these changes by upgrading our systems to enable you to take advantage of the reforms.

Our team will be in contact with you, should the changes affect you, which will include nomination of your Metering Coordinator and other items before 1 December, 2017.

 

What’s happening in the energy market?

The National Electricity Market (NEM) is one of the most volatile markets in the world, being a “merchant market” with wholesale prices settled on a half hourly basis.

Volatility of energy prices in the NEM can be caused by numerous factors: weather, load, generator and fuel availability, amongst others.

Some recent influences on NEM prices include:

  • The notice of closures of the Hazelwood and Northern power plants has seen these baseload generators withdrawn from the NEM without replacement. Concerns around security of supply and network stability have been reflected in volatile and rising prices.
  • Bushfire damage to rail infrastructure and disruption to coal deliveries to NSW assets has contributed to generation curtailment.  This constraint, coupled with other market generator issues, has placed strain on the availability of baseload generators, which has translated to volatility in retail prices.
  • The lack of domestic gas supply has increased the marginal cost of gas-fired generation for peaking (high-demand) requirements, which is being reflected in the bid price for this firm peaking generation capacity.
  • In markets where there is no baseload coal and intermittent generation (renewables), i.e. SA, the lack of gas and requirement to import any shortfall in energy from neighbouring States contributes to volatility generally across the NEM.
  • Intervention and policy uncertainty is doing little to contribute to price stability between regions.
HVBrokers r1 720w

Figure 1 Historic energy futures price contrasted against key generator events (source HVBroker).

HVBrokers r1 720w

Figure 2 Example of change in energy generation mix in SA relative to energy demand.

Figure 1 highlights some of the key events against energy futures pricing, with Figure 2 illustrating the energy transition that is occurring in South Australia (and being seen across other states).

 

South Australia Energy Security Target Scheme

For our South Australian customers, we would like to remind you that the South Australian State Government have announced a new scheme that should take effect from 1st January 2018, the Energy Security Target (“EST”).

Find out more about the South Australia Energy Security Target Scheme from:

The Essential Services Commission of South Australia, and

The South Australian Government

Draft legislation to establish the scheme is currently being reviewed by the Government.