Today the Australian Energy Regulator has today released this year’s edition of their annual ‘State of the Energy Market’ report. The official media release highlighted that there were ‘fewer shocks and better outcomes’ compared to the findings from the same report released twelve months ago.

The final report can be found here. In the accompanying media release, the AER states:

“The report reveals some improved outcomes in wholesale energy markets with average wholesale electricity prices significantly lower than the record highs seen in 2022. Wholesale gas prices also declined significantly from 2022 but remain high by historical standards.”

“Increases in wholesale energy prices were evident in retail prices, with estimated electricity bills rising between 9% and 20% in all NEM jurisdictions in 2022-23, impacting households already experiencing broader cost-of-living pressures. “

One particular paragraph that stood out to me in the report executive summary by Clare Savage, AER Chair, highlights concerns about increasing concentration of flexible generation assets:

“Finally, we have raised concerns in relation to open and competitive markets. Our concerns are around the reduced liquidity of exchange-traded hedging products, the declining number of clearing service providers for electricity derivatives, and the levels of concentration of ownership of flexible generation capacity, particularly in NSW and Victoria. The AER’s anticipated new powers in relation to contract market monitoring will allow us to better monitor participant behaviour and gain sharper insights on issues of competition and market power.”

Early Media Coverage

As of this afternoon, I have noted the following media coverage related to the release of the report:

• Australian Financial Review
  • Energy regulator warns of growing Snowy Hydro market power by Angela Macdonald-Smith
• RenewEconomy
  • Cost of keeping coal alive “considerable,” says AER, as market factors in emissions by Sophie Vorrath
• Energy Magazine
  • AER report: Network improved, challenges remain by Yasmin Isaacs
• The West Australian
  • Regulator sounds alarm on further power bill pain with fears over energy transition by Jack Quail