Queensland Energy Prices July 2018

Queensland Energy Prices July 2018
Queensland Energy Prices
July 2018
An update report on the Queensland Tariff-Tracking Project
Queensland Energy Prices July 2018
An Update report on the Queensland Tariff-Tracking Project

May Mauseth Johnston, August 2018
Alviss Consulting Pty Ltd




 www.alvissconsulting.com                            www.vinnies.org.au
   twitter.com/AlvissC                                 twitter.com/VinniesAust




Contact: Gavin Dufty
Manager, Social Policy Unit Victoria
St Vincent de Paul Society
Phone: (03) 98955816 or 0439 357 129
   twitter.com/gavindufty




© St Vincent de Paul Society and Alviss Consulting Pty Ltd
This work is copyright. Apart from any use permitted under the Copyright Act 1968 (Ctw), no parts may be
adapted, reproduced, copied, stored, distributed, published or put to commercial use without prior written
permission from the St Vincent de Paul Society.
Disclaimer
The energy offers, tariffs and bill calculations presented in this report and associated workbooks should
be used as a general guide only and should not be relied upon. The workbooks are not an appropriate
substitute for obtaining an offer from an energy retailer. The information presented in this report and the
workbooks is not provided as financial advice. While we have taken great care to ensure accuracy of the
information provided in this report and the workbooks, they are suitable for use only as a research and
advocacy tool. We do not accept any legal responsibility for errors or inaccuracies. The St Vincent de Paul
Society and Alviss Consulting Pty Ltd do not accept liability for any action taken based on the information
provided in this report or the associated workbooks or for any loss, economic or otherwise, suffered as
a result of reliance on the information presented. If you would like to obtain information about energy
offers available to you as a customer, go to Australian Energy Regulator’s “Energy Made Easy” website or
contact the energy retailers directly.

Acknowledgments
This project was funded by Energy Consumers Australia (www.energyconsumersaustralia.com.au) as part
of its grants process for consumer advocacy projects and research projects for the benefit of consumers
of electricity and natural gas.

The views expressed in this document do not necessarily reflect the views of Energy Consumers Australia.
Contents
The Queensland Tariff-Tracking Project	                  1
1. Energy price changes from July 2017 to July 2018	     2
     Methodology and assumptions	 
2. Market offers post July 2018	                         5
     2.1 Electricity: Market offers post July 2018	      5
     2.2 Gas market offers post July 2018	              10
3. Supply charges	                                      13
     3.1 Electricity supply charges	                    13
     3.2 Gas supply charges	                            14
4. Cost components and bill-stack analysis 	            15
6. Solar offers	                                        19
     Methodology and assumptions	                       19
The Queensland Tariff-Tracking Project
This project has tracked electricity and gas tariffs in Queensland from July 2009 to July 2018, and
developed a spreadsheet-based tool that allows consumer advocates to build on the initial analysis
and continue to track changes as they occur. The first report for the Queensland Tariff-Tracking project
was published in August 2012 and this is the fourth up-date report focusing on price changes that have
occurred over the last year.

We have developed workbooks that allow the user to enter consumption levels and analyse household
bills for regulated gas and electricity offers from July 2009 to July 2016, as well as published electricity
and gas market offers post the price resets in July 2012, 2013, 2014, 2015, 2016, 2017 and 2018.1 A
recent addition to the Tariff-Tracking project is market offers available to new solar customers. The
workbook allows users to calculate annual bills based on retailers’ rates, feed in tariffs offered and
additional discounts. Again, the user can enter consumption level as well as choosing to run the bill
calculation based on 1.5 kW or 3 kW solar systems.

Workbook 1: Standing/Regulated electricity offers July 2009-July 2018
Workbook 2: Standard gas retail offers July 2009-July 20182
Workbook 3: Electricity market offers July 2012 - July 2018
Workbook 4: Gas market offers post July 2012 - July 2018
Workbook 5: Solar market offers post July 2016, July 2017 and July 2018

The jurisdictional update reports will be followed by a NEM comparison report that discusses market
issues and customer impacts in more detail as well as making recommendations.

All workbooks and reports can be accessed at the St Vincent de Paul Society’s website:
www.vinnies.org.au/energy




1
  All market offers are published offers and do not include special offers that retailers market through door-knocking campaigns or
brokers. We use the retailers’ own websites to collect market offer for the Queensland Tariff-Tracking tool. If the retailer has more
than one market offer we use the offer that produces the lowest annual bill and/or the offer the retailer promotes as it’s best offer.
Prior to July 2016, the Tariff-Tracking tool does not include any additional discounts or bonuses but key market offer features are
listed in the spreadsheets. This report contains analysis of some of those features.
2
  Note: Queensland does not have regulated gas offers.
                                                                  1
1. Energy price changes from July 2017 to July 2018
In terms of general trends, the tariff analysis has found that:3

    • Annual electricity bills for all-electric households on AGL and Origin’s standing offers (tariff 11) have
    typically decreased by around $40 (or 2%) since July 2017.4 See chart 1 below.

    • For customers on the Time of Use tariff (tariff 12), the annual bill has typically decreased by $60 (or
    2%) since July 2016. See chart 1 below.

    •   Gas bills have remained unchanged in all areas since July 2017. See chart 2, 3 and 4 below.

    • The average annual electricity bill (all retailers) for households using 8,000 kWh per annum is
    currently around $2,755 for standing offer customers and just under $2,330 for market offer customers
    (including pay on time discounts). See chart 5 in section 2.1.

    • Compared to last year (July 2017), the average electricity market offer (inclusive of pay on time
    discounts) has decreased by $190 or 7.5%. See section 2.1.

    • A household switching from Origin or AGL’s standing offer (Tariff 11) to the best electricity market
    offer may save around $540 - $600 per annum. See section 2.1.

    • The difference between market offers is also significant. The difference between the best and the
    worst market offers is between $705 and $775 (depending on tariff type) for customers that always pay
    bills on time. See charts 6-9 in section 2.1.

    • As most retailers offer pay on time discounts, and many charge late payment fees, paying late can
    significantly erode savings available from switching to a better market offer. Customers on Alinta’s
    offer, for example, may pay $641 more per annum if they do not pay their bills by the due date.5 See
    section 2.1.

    • There have been no changes to AGL and Origin’s gas market offers since last year (July 2017). See
    section 2.2.

    • As retail charges are no longer regulated, the supply charge varies between retailers. While the
    majority of retailers apply the same fixed supply charge to their standing offer as they do to their
    market offer, some retailers apply higher supply charges to their standing offers. They are Q Energy,
    Mojo, Energy Locals, Dodo and Red Energy. See chart 15 in section 3.1.

    • The network charge component of the bill continues to decrease. The NUOS proportion of standing
    offer bills is currently 32%. See chart 17 in section 4.

    • We estimate that the 2018/19 retail component of annual bills (based on retail offers available as of
    July 2018) will be approximately $670 for standing offer customers, $440 for market offer customers
    (including pay on time discounts) and $75 for market solar customers (including pay on time
    discounts). See table 7 in section 4.

    • The average annual bill is approximately $1,420 for households with 3 kW systems and $1,835
    for households with 1.5 kW systems installed. This means that the average annual bill is $910 less
    for solar households with 3 kW systems installed compared to non-solar households. Compared to
    last year, the average market offer for solar customers (3 kW systems) has decreased by $160 or
    approximately 10%. See section 5.

3
  These calculations are based the regulated/standing offer for all-electric households using 8,000kWh per annum (thereof 15%
off-peak for customers on tariff 31 or 33) and the average changes to gas offers based on customers using 10,000Mj per annum.
4
  According to the AEMC, 82% of small customers in South East Queensland were AGL or Origin customers in 2016 and more
recent reports have not indicated a major move away from these two retailers (AEMC, Retail Competition Review 2016, Final
report, 174).
5
  Alinta offers 28% off usage charges if bills are paid on time. Based on households using 8,000 kWh per annum.
                                                              2
• The comparison of market offers available to new solar customers shows that there are significant
      differences between the bills the retailers’ offers produce, and that it is not necessarily the retail offers
      with the highest feed in tariffs (FIT) that produce the lowest bill. Brisbane solar customers with a
      typical consumption and a 3 kW system installed, may save $730 per annum if switching from the
      worst market offer to the best. See section 5.

                                                                    2,800
     Chart 1 Changes to annual electricity
     bills from July 2017 to July 2018,                             2,700
     8,000kWh per annum, GST inclusive6
                                                                    2,600

                                                                    2,500




                                                  Annual bill ($)
                                                                    2,400

                                                                    2,300

                                                                    2,200


                                                                    2,100

                                                                    2,000


                                                                    1,900
                                                                                 Tariff 11         Tariff 31            Tariff 33               Tariff 12

                                                                                                      Jul'17   Jul'18



Table 1 Increases to annual bills for electricity by tariff type July 2017 – July 20187
                                Tariff 11                                 Tariff 31                Tariff 33                        Tariff 12
    $ Increase                  -$40                                      -$40                     -$40                             -$60
    % Increase                  -2%                                       -1%                      -1%                              -2%


Both AGL and Origin left their gas prices unchanged on 1 July for all gas pricing zones. This means that
Origin continues to offer the lowest gas prices in both Brisbane North and Brisbane South.


		                                                                  900

     Chart 2 Changes to annual gas bills                            850
     from July 2016 to July 2017, 10,000Mj                                                                                                                  -
                                                                    800
     South Brisbane & South Queensland8
                                                                    750
                                                  Annual bill ($)




                                                                    700

                                                                    650

                                                                    600

                                                                    550

                                                                    500

                                                                    450

                                                                    400
                                                                                             AGL                                     Origin
                                                                                                     South Brisbane (APT)

                                                                                                      Jul'17   Jul'18




6
  Based Origin and AGL’s standing offers. For Tariff 31 and 33, 15% of consumption has been allocated to off-peak rates. For Tariff
12, the allocations are: 20% peak, 55% shoulder and 25% off-peak.
7
  Ibid.
8 AGL and Origin’s standard rates and customers using 10,000Mj per annum.
                                                                                 3
850
     Chart 3 Changes to annual gas bills
     from July 2017 to July 2018, 10,000Mj -                          800

     North Brisbane & Ipswich9                                        750

                                                                      700




                                                    Annual bill ($)
                                                                      650

                                                                      600

                                                                      550

                                                                      500

                                                                      450

                                                                      400
                                                                                        AGL                                        Origin
                                                                                                    North Brisbane (Envestra)

                                                                                                        Jul'17   Jul'18




                                                                      900
     Chart 4 Annual gas bills as of July 2017
     and July 2018, 10,000MJ – Origin’s rates                         800
     in the Northern retail area and Wide
     Bay10                                                            700
                                                    Annual bill($)




                                                                      600


                                                                      500


                                                                      400


                                                                      300


                                                                      200
                                                                                North ern retail area                           Wide Bay area
                                                                                                          Envestra/Origin

                                                                                                        Jul'17   Jul'18




9
 Ibid.
10
  The Northern retail area covers Rockhampton and Gladstone and the Wide Bay area covers Bundaberg, Maryborough and
Hervey Bay. Origin is the only retailer with offers for residential customers in these areas. Bill estimates based on customers using
10,000MJ per annum.
                                                                            4
2. Market offers post July 2018

2.1 Electricity: Market offers post July 2018

Chart 5 below shows that the average annual bill for households using 8,000kWh per annum is around
$2,755 for standing offer customers and just under $2,330 for market offer customers (including pay on
time discounts). Furthermore, it shows that many retailers apply the same rates to their standing offers and
their market offers but offer pay on time (POT) discounts for market offer customers.

Compared to last year (July 2017), the average market offer (inclusive of pay on time discounts) has
decreased by $190 or 7.5%.

                                                                   3,800
     Chart 5 Electricity offers as annual                          3,600
     bills, July 2018, Single rate (tariff 11)                     3,400
     8,000kWh per annum, GST inclusive11                           3,200
                                                                   3,000
                                                                   2,800
                                                 Annual bill ($)




                                                                   2,600
                                                                   2,400
                                                                   2,200
                                                                   2,000
                                                                   1,800
                                                                   1,600
                                                                   1,400
                                                                   1,200
                                                                   1,000




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                                                                       Standing         Market (excl POT)        Market (incl POT)

                                                                       Avg. standing    Avg. market (excl POT)   Avg. market (incl POT)




As stated above, many market offers include features such as discounts on consumption rates, vouchers,
sign-up credits, loyalty bonuses and discounts if bills are paid on time or paid by direct debit.

Consumers assessing market offers should take these additional features into account and be aware of
contract conditions such as late payment fees, the length of the contract and fees for exiting the contract
early.

Charts 6-9 below show the difference in annual bills between retailers’ standing offers and market offers
based on guaranteed discounts (if any), as well as market offers including pay on time discounts (if any) for
tariff 11, 31, 33 and 12. Tariff 11 customers on AGL and Origin’s standing offers can save $600 and $540
respectively by switching to the best market offer (Alinta’s). If the same standing offer customers switched
to Dodo, however, they would be $135 and $195 worse off respectively.

The maximum difference, or price spread, between annual bills for market offers (including pay on time
discounts) is $730 for tariff 11, $705 for tariff 31 and 33, and $775 for tariff 12.




11
  The retail offers were collected from the retailers’ websites between the 1st of July and the 1th of August 2018 and it must
be noted that retailers may change their rates at any time. Annual bill calculations shown as green columns include guaranteed
discounts and pay on time discounts.
                                                                                    5
4,000
Chart 6 Tariff 11: Annual bills based on
guaranteed discounts vs. pay on time
                                                             3,500
discounts as of July 2018 (8,000kWh
per annum, including GST).




                                           Annual bill ($)
                                                             3,000


                                                             2,500


                                                             2,000


                                                             1,500




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                                                                       Standing offer         Guaranteed discounts     Pay on time discounts



                                                             4,000
Chart 7 Tariff 31: Annual bills based on
guaranteed discounts vs. pay on time                         3,500
discounts as of July 2018 (8,000kWh
per annum, 15% off-peak, including
                                           Annual bill ($)




                                                             3,000
GST).

                                                             2,500



                                                             2,000



                                                             1,500
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                                                                             Standing offer    Guaranteed discounts   Pay on time discounts




                                                             4,000

Chart 8 Tariff 33: Annual bills based on
guaranteed discounts vs. pay on time                         3,500
discounts as of July 2018 (8,000kWh
per annum, 15% off-peak, including
                                           Annual bill ($)




                                                             3,000
GST).

                                                             2,500



                                                             2,000



                                                             1,500
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                                                                             Standing offer    Guaranteed discounts   Pay on time discounts




                                                                               6
4,000
  Chart 9 Tariff 12: Annual bills based on
  guaranteed discounts vs. pay on time
                                                                    3,500
  discounts as of July 2017 (8,000kWh
  per annum, 20% peak, 55% shoulder
  and 25% off-peak, including GST).




                                                  Annual bill ($)
                                                                    3,000



                                                                    2,500



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                                                                    1,500




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                                                                                   Standing offer   Guaranteed discounts   Pay on time discounts


Figure 1 below shows estimated annual bills for market offers post discounts ranked from the lowest
annual bill to the highest (for Tariff 11). the highest (for Tariff 11) as well as how they ranked compared to
other retailers one year ago (in brackets).12

Figure 1 Lowest to highest annual bills (incl GST) for market offers post July 2018, including discounts and pay on
time discounts - Households consuming 8,000kWh per annum (Tariff 11)

           Alinta                  $2,044

           QEnergy                 $2,052

           AGL                     $2,057

           Energy Australia        $2,064

           Powerdirect             $2,102

           Powershop               $2,116

           Red Energy              $2,198

           Origin Energy           $2,271

           Diamond Energy          $2,293

           Simply Energy           $2,357

           Click Energy            $2,414

           Energy Locals           $2,420

            Sanctuary Energy       $2,665

           Mojo Power              $2,694

           Amaysim                 $2,698

           Dodo Power & Gas        $2,775
                                                 12
                                                    These bill estimates are based on rates published on the retailers’ websites
between the 1st of July and the 1th of August 2018 and it must be noted that retailers may change their rates at any time.
Additional discounts for customers choosing to pay by direct debit are not included in these bill calculations.
                                                                                    7
The discounts (including pay on time discounts) used to estimate annual bills for Charts 6-8, as well as
Figure 1, above are shown in table 2 below. Table 2 also shows other contract terms and features, such
as early termination fees, associated with these market offers. Some of the retailers have multiple market
offers and may offer higher discounts than those listed here. However, if discounts are higher they are
typically tied to other conditions such as payment by direct debit, e-billing or dual fuel contracts.

Table 2 Published electricity market offers, effective as of July 2018: Key additional features and contract
conditions

                             Guaranteed          Contract       ETF*        LPF*      Pay on time         Offer took
                             discounts           term/fixed                           discounts           effect
                                                 benefit period
 AGL                         No                  1 year             No      $12.73    26% off usage       3/7/18
 Savers
 Origin                      12% off bill        1 year             No      $12       No                  1/7/18
 Bill Saver
 Energy Australia            28% off usage       1 year             No      $12       No                  2/7/18
 Anytime Saver
 Click People                No                  No                 No      $12       15% off bill        1/7/18
 Agate
 Energy Locals               No                  No                 No      $13       No                  10/7/18
 Save Me
 Simply Energy               No                  2 years            No      No        18% off usage       14/5/18
 Plus
 Diamond                     No                  No                 No      No        7% off bill         1/8/18
 Pay on time
 Sanctuary                   No                  No                 No      No        No                  1/7/17
 Negotiated
 Mojo Power                  No                  No                 No      $12       No                  1/12/17
 Connect
 Powershop                   No                  No                 No      No        12% off bill^       1/7/18
 Power Saver
 Red Energy                  No                  No                 No      No        10% off bill        1/7/18
 Easy Saver
 Powerdirect                 No                  1 year             No      $12.73    24% off usage       4/7/18
 Market offer
 Dodo                        No                  No                 No      No        No**                23/2/18
 Market offer
 Amaysim                     No                  No                 No      $12       5% off bill         1/7/18
 Electricity 4
 Alinta Home                 No                  2 years            No      No        28% off usage       11/2/18
 Saver Plus
 Q Energy                    No                  2 years            No      No        No                  12/6/18
 Flexi Saver Home
* ETF = Early Termination Fee and LPF = Late Payment Fee
^ To qualify for Pay on Time discount, customer must log in to Powershop at least once a month and buy enough of
the Power Saver to cover consumption for the Account Review period.
** Dodo offers a Pay on Time discount if the customer signs up to Direct Debit.

As many retailers tend to apply the same rates as the regulated rates to their market offer and then offer
discounts, it is important that customers are aware that many of these discounts are conditional upon bills
being paid on time. Pay on time discounts, combined with late payment fees on market offers, means
                                                           8
that Queensland households can be significantly penalised for late payment.13 Or conversely, Queensland
households can be significantly rewarded for prompt payment. It does, however, highlight an issue that
negatively impacts on households with cash-flow problems.

Table 3 below shows that paying late can become very expensive on some market offers. Households
on the Alinta Energy and AGL market offer, for example, would be approximately $640 worse off if they
pay late compared to paying on time. Powerdirect customers would be $590 worse off if they pay their
bills after the due date. As most retailers bill customers quarterly, these numbers are based on four late
payment fees (where applicable) per annum. Click Energy and Mojo, however, issue monthly bills for these
offers and customers can therefore be charged up to $144 per annum in late payment fees alone.14

Table 3 Electricity offers as of July 2018: Difference ($) in annual bill between paying all bills on time vs. paying all
bills late (based on 8,000kWh and 4 bills per annum)

                                    Tariff 11
 Alinta Energy                         641
 AGL                                   634
 Powerdirect                           589
 Click Energy                          474
 Simply Energy                         444
 Powershop                             288
 Red Energy                            244
 Amaysim                               190
 Diamond Energy                        173
 Energy Locals                         52
 EnergyAustralia                       48
 Origin Energy                         48
 Mojo Power                            48
 Dodo Power & Gas                       0
 Sanctuary Energy                       0
 Q Energy                               0


As both the size of pay on time discounts and the number of retailers applying them have increased, the
difference in electricity bills between customers that pay on time and customers that pay late is at a record
high. Chart 10 below shows the estimated annual electricity bill (tariff 11) for customers that always pay
on time and for those who always pay late.




13
   The Queensland Electricity Industry Code (clause 4.13.5) does not permit retailers to apply late payment fees to the regulated
offer unless the fee is “expressly provided for in the notified prices”.
14
   Click Energy and Mojo’s late payment fees are $12.
                                                                 9
3,000
     Chart 10 Tariff 11: Estimated annual                        2,800
     bill for customers that pay on time vs.
                                                                 2,600
     pay late, electricity offers as of July
     2018, 8,000kWh per annum (GST inc).                         2,400




                                               Annual bill ($)
                                                                 2,200

                                                                 2,000

                                                                 1,800

                                                                 1,600

                                                                 1,400

                                                                 1,200

                                                                 1,000




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                                                                                        Paid on time    Paid late


2.2 Gas market offers post July 2018

There are no regulated gas offers in Queensland and currently only Origin and AGL have gas market offers
for residential consumers. As only North Brisbane (including Ipswich) and South Brisbane (including Gold
Coast, Toowoomba, Oakey) have more than one market offer, this analysis only comprises market offers
in these two areas.15 Chart 11 below shows that there is a relatively small ($40) difference between AGL
and Origin’s market offer rates (prior to additional discounts) in the Envestra zone (Brisbane North). In the
APT zone (Brisbane South) Origin’s market offer produces an annual bill that is approximately $90 less
than AGL for households with this consumption level. The average market offer (inclusive of pay on time
discounts) has remained unchanged since July 2017.16


                                                                       880

     Chart 11 Gas offers as annual bills, Post                         860
     July 2018 (10,000MJ per annum)
                                                                       840

                                                                       820
                                                     Annual bill ($)




                                                                       800

                                                                       780

                                                                       760


                                                                       740

                                                                       720

                                                                       700
                                                                                  APT                               Envestra

                                                                                               AGL     Origin



The calculations for the market offers in Chart 11 include their rates only (cost per MJ and fixed charges)
and do not include other market offer features such as discounts on consumption rates, vouchers, sign-up
credits, loyalty bonuses and discounts if bills are paid on time. Consumers assessing market offers should
take these additional features into account and be aware of contract conditions such as late payment
fees, the length of the contract and fees for exiting the contract early.



15
   Gas customers in Rockhampton, Gladstone, Bundaberg, Maryborough and Hervey Bay only have access to Origin’s market
offers.
16
   Average market offer bill based on Origin and AGL’s offers in the APT and Envestra gas zones.
                                                                             10
Table 4 Published gas market offers in the APT and Envestra gas zones as of July 2018: Key features and
contract conditions

                        Guaranteed Contract term/fixed                    ETF*     LPF*       Pay on time          Offer took
                        discounts  benefit period                                             discounts            effect
 AGL                    No                1 year                          No       $12.75     5% off usage         3/7/18
 Savers
 Origin                 No                1 year                          No       $12        4% off usage         1/7/18
 Saver
* ETF = Early Termination Fee and LPF = Late Payment Fee


The discounts (including pay on time discounts) used to estimate annual bills for Figures 2 and 3, as well
as charts 12-13 below, are shown in table 4 above. Table 4 also shows other contract terms and features,
such as late payment fees, associated with these market offers.

The difference between the best and the worst market offers is less for gas than electricity. Furthermore,
as there is only a small difference between AGL and Origin’s discounts, the difference between the
two market offers post discounts is similar to the difference prior to discounts (see chart 11 above) for
this consumption level. Figures 2 and 3 below show estimated annual bills for gas market offers post
discounts in the APT and Envestra gas zones as well as how they ranked compared to other retailers one
year ago (in brackets).17

Figure 2 APT gas zone: Lowest to highest annual bills (incl GST) for market offers post July 2018,
including discounts and pay on time discounts - Households consuming 10,000MJ per annum

           Origin Energy           $757

           AGL                     $842


Figure 3 Envestra gas zone: Lowest to highest annual bills (incl GST) for market offers post July 2018,
including discounts and pay on time discounts - Households consuming 10,000MJ per annum

           Origin Energy           $736

           AGL                     $771


Charts 12-13 below show the estimated annual gas bill for customers that always pay on time and
customers who do not, for published gas offers in the APT and Envestra gas zones. Chart 12 shows that
both AGL and Origin’s annual bills are $60 - $70 less for prompt payers compared to late payers in the
APT gas zone.




17
  These bill estimates are based on rates published on the retailers’ websites between the 1st of July 2017 and the 1st of August
2018, and it must be noted that retailers may change their rates at any time.
                                                                11
950
     Chart 12 APT gas zone: Estimated
     annual bills for customers that pay on                              900
     time vs. pay late, gas offers as of July
     2017 (10,000Mj, GST inc)18
                                                                         850




                                                       Annual bill ($)
                                                                         800


                                                                         750


                                                                         700


                                                                         650


                                                                         600
                                                                                    AGL                              Origin

                                                                                          Paid on time   Paid late




Chart 13 below shows that there are similar differences between AGL and Origin’s offers in the Envestra
gas zone. Annual bills are $65 - $75 less for prompt payers compared to late payers in this pricing zone.

                                                                       950
     Chart 13 Envestra gas zone: Estimated
     annual bills for customers that pay on
                                                                       900
     time vs. pay late, gas offers as of July
     2018 (10,000MJ, GST inc)19
                                                                       850
                                                     Annual bill ($)




                                                                       800


                                                                       750


                                                                       700


                                                                       650


                                                                       600
                                                                                    AGL                              Origin

                                                                                          Paid on time   Paid late




18
     Annual bill calculation includes discounts, pay on time discounts and late payment fees as per energy offer.
19
     Ibid.
                                                                               12
3. Supply charges

3.1 Electricity supply charges

The supply charge is a fixed daily charge that is paid in addition to the consumption charges for electricity
used. In Queensland the supply charge for single rate electricity customers (tariff 11) has decreased by
2% since July 2016. In July 2013, 2014 and 2015, however, there were significant increases to the supply
charge. The average supply charge (based on AGL and Origin’s standing offers) is still almost 116.50 cents
per day meaning that households pay around $425 per annum in fixed charges. Chart 14 below shows the
changes to the daily supply charge from July 2009 to July 2018.

                                                                  140
     Chart 14 Daily supply charge, Tariff 11,
     regulated/standing electricity offers,
                                                                  120
     2009-1820

                                                                  100
                                                  Cents per day




                                                                   80



                                                                   60



                                                                   40



                                                                   20



                                                                    0
                                                                        July '09 July '10 July '11 July '12 July '13 July '14 July '15 July '16 July '17 July '18


As the retail charges are no longer regulated, the supply charge varies between retailers. Chart 15 shows
that around half of the retailers apply the same fixed supply charge to their standing offer as they do to
their market offer. Some retailers (Mojo, Simply, Energy Locals, Dodo and Red), however, apply higher
fixed charges to their standing offers. Click Energy, on the other hand, applies a higher supply charge to its
market offer than it does to its standing offer.

                                                             240.00
     Chart 15 Daily supply charge July
                                                             220.00
     2018, Tariff 11, Cents/day incl. GST
                                                             200.00

                                                             180.00

                                                             160.00
                                                 Cents/day




                                                             140.00

                                                             120.00

                                                             100.00

                                                                  80.00

                                                                  60.00

                                                                  40.00
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                                                                                                       Standing    Market




20
     The 2016, 2017 and 2018 charges are based on AGL and Origin’s average supply charge
                                                                                  13
3.2 Gas supply charges

In July 2018, APT (Brisbane South) and Envestra (Brisbane North) distribution zones maintained their same
respective July 2017 average fixed supply charge for rates. The average gas supply charge is still just
over 120 cents/day in the APT distribution area and approximately 77 cents/day in the Envestra (Brisbane
North) pricing zone. This effectively means that South Brisbane households (APT zone) continue to pay
$440 per annum in order to be connected to natural gas. Chart 16 below shows changes to the gas supply
charge from July 2009 to July 2018 for both gas zones.


                                                              140
     Chart 16 Gas supply charges from July
     2009 to July 2018, Cents per day21
                                                              120


                                                              100
                                              Cents per day
                                                               80


                                                               60


                                                               40


                                                               20


                                                                0
                                                                    July '09 July '10 July '11 July '12 July '13 July '14 July '15 July '16 July '17 July '18

                                                                                                  APT    AGN/Envestra




The average domestic gas consumption in Queensland is relatively low and as such the supply charges
comprise a significant proportion of the annual gas bill.22 For households consuming 10,000MJ per
annum in the APT gas zone, the supply charge makes up 52-56% of the annual bill, depending on the
retailer. In the Envestra zone (Brisbane North), the supply charge makes up approximately 35-37% of the
annual bill (for the same consumption level).




21
  Based on the average gas supply charge (AGL and Origin).
22
  We have assumed typical residential annual gas consumption in Queensland to be 10,000MJ per annum while in Victoria we
base it on 63,000MJ.
                                                                             14
4. Cost components and bill-stack analysis
The Queensland electricity networks, Energex and Ergon, introduce new Network Use of System (NUOS)
charges as of 1 July every year. These NUOS charges are approved by the Australian Energy Regulator
(AER) and comprise Transmission Use of System (TUOS) and Distribution Use of System (DUOS) and the
retailers can, and generally will, build changes to the NUOS (in relation to both shape and price) into their
retail tariffs.

Chart 17 shows annual retail bills (solid line), NUOS charges as annual cost (dotted line) and NUOS as
proportion of annual bill (columns).23

It shows that both the NUOS charge and the NUOS proportion of bills have decreased from July 2015.
This year (July 2018) the overall retail bill has also decreased slightly. The NUOS proportion of bills is
currently 32%.


     Chart 17 Energex: Retail bill per annum                     3000                                                                                100

     (incl. GST), NUOS charges and NUOS as                                                                                                           90
     proportion of total bill (incl. GST) from                   2500
     2009 to 2018 (based on the regulated/                                                                                                           80

     standing retail offer, Tariff 11, 8,000 kWh                                                                                                     70
     per annum)24                                                2000




                                                                                                                                                           % of annual cost
                                                                                                                                                     60
                                                   $ per annum




                                                                 1500                                                                                50

                                                                                                                                                     40
                                                                 1000
                                                                                                                                                     30

                                                                                                                                                     20
                                                                 500
                                                                                                                                                     10

                                                                    0                                                                                0
                                                                        2009        2010   2011   2012   2013   2014   2015   2016   2017     2018

                                                                                       NUOS proportion (%)        NUOS ($)       Retail ($)




In addition to NUOS charges and retail, other key cost components of electricity bills are generation
(wholesale market) costs, “green schemes” costs, and other costs associated with other public policy
initiatives.

To estimate the wholesale cost, we have relied on both the AEMC’s annual price trend report for 2017.

Table 5 Wholesale costs in Queensland ($/MWh) from 2016/17 to 2018/19

                         Electricity Purchase Cost
 2016/17                 $94
 2017/18                 $113.9
 2018/19                 $93.6

* Estimated energy purchase cost for 2016/17, 2017/18 and 2018/19 (financial years). Based on Figure 24 in Frontier
Economics, 2017 Residential Electricity Price Trends Report, A report prepared for the AEMC December 2018, 59.
Note that the AEMC has supplied the numbers that the base case scenario in Figure 24 is based on.

23
   The regulated residential retail tariff, which applies to residential customers across Queensland, is based on Energex’ network
tariff only.
24
   Based on the regulated retail offer rates from 2009 to 2015 and AGL and Origin’s standing offers (average) as of July 2016, 2017
and 2018. Presented as annual bills for households using 8,000kWh per annum (flat rate). The annual NUOS charges have been
calculated by allocating 2,000kWh per quarter (again based on annual consumption of 8,000kWh) to the step charges stipulated in
the NUOS. The annual NUOS cost also includes fixed charges.
                                                                               15
The AEMC’s Residential Electricity Price Trends report have also been used as a source to estimate “green
scheme” costs for Queensland.25 The significant decrease to the impact of “green scheme” costs on
electricity bills from 2017/18 is due to the Queensland Government’s decision to move charges associated
with the Solar Bonus Scheme away from energy bills to the Queensland Government budget.26 Table 6
below shows the cost of “green schemes” used for this analysis.

Table 6 AEMC estimated “Green scheme” costs (c/kWh) from 2016/17 to 2018/19

                         Green Schemes (c/kWh)
 2016/17                 3.85
 2017/18                 1.06
 2018/19                 1.20

In order to examine what households actually pay for the various services (and policies) that are costed by
the supply chain and passed on to consumers in the form of a retail bill, table 7 below estimates the retail
component of bills for standing offer customers, market offer customers and new solar market offers. All
tables are based on households consuming 8,000 kWh per annum at a single rate tariff.

By deducting GST, NUOS costs, wholesale costs and the cost of environmental policies (“green
schemes”), amounts in the final row represent the estimated retail component (retail costs and profits).
As of July 2018, the estimated retail component is approximately $670 per annum for standing offer
customers, $440 for market offer customers (including pay on time discounts) and $75 for solar customers
(including pay on time discounts).27

Table 7 Deduction of bill components for standing, market and solar offers in the Energex network area,
average annual bill based on offers effective as of July 2018 (8,000kWh per annum, single rate)

                                Standing offer^             Market offer^^                Solar offer^^^
 Retail bill incl. GST          2,611                       2,326                         1,418
 Retail bill excl. GST          2,374                       2,115                         1,289
 Retail bill excl. GST          1,544                       1,285                         664
 and NUOS*
 Retail bill excl. the          795                         536                           142
 above and whole-
 sale***
 Retail bill excl. the          699                         440                           75
 above and ‘Green
 Schemes’

^ Based on AGL and Origin’s average standing offers (July 2018)
^^ Average across all retailers (July 2018), including pay on time discounts
^^ Average across all retailers (July 2018), including pay on time discounts, metropolitan households with 3kW systems installed
* NUOS as of July 2018
**Based on $93.6/MWh
***LRET @ 0.87 c/kWh, SRES @ 0.33 c/kWh, Solar Bonus @ 0.0 c/kWh

Based on the calculations in table 7 above, chart 18 shows the estimated bill proportion (%) of each cost
for standing offer, market offer and solar customers.

25
   Estimated energy purchase cost for 2016/17, 2017/18 and 2018/19 (financial years). Based on Figure 24 in Frontier Economics,
2017 Residential Electricity Price Trends Report, A report prepared for the AEMC December 2018, 59. Note that the AEMC has
supplied the numbers that the base case scenario in Figure 24 is based on.
26
   See AEMC, Residential Electricity Price Trends Reports, 2017, Figure B3, 89.
27
   Note that this is based on components of customers’ bills and not retailers’ revenue from each customer type. The energy
exported by solar customers does, for example, have a value to the retailers. Other charges such as market fees and ancillary
service fees as well as losses have not been accounted for in this bill-stack.
                                                                16
100%
                                                                         4                             5                          5
     Chart 18 Bill-stack (%) for standing,
                                                                                                                                  6
     market and solar offers in the Energex          90%
                                                                                                       21
     network area, average annual bill               80%                29
     based on offers effective as of July
     2018 (8,000kWh per annum, single                70%                                                                          40
     rate, excl GST)                                 60%
                                                                                                       35
                                                     50%                32

                                                     40%

                                                     30%
                                                                                                                                  49
                                                     20%                                               39
                                                                        35
                                                     10%

                                                      0%
                                                                      Standing                    Market                         Solar

                                                                              NUOS    Wholesale       Retail   Green Schemes



In terms of changes over time, the average retail proportion of bills has increased significantly for standing
offer bills (chart 19 below) while the NUOS and “green scheme” proportions have decreased.


     Chart 19 Bill-stack (%) for average                                     NUOS    Wholesale        Retail    Green Schemes
     standing offer bills (AGL and Origin),
                                                                                                  4                              4
     from July 2016 to July 2018 (8,000kWh                       13
     per annum, single rate, excl GST)                                                            21
                                                                  6
                                                                                                                                 29


                                                                 33
                                                                                                  38
                                                                                                                                 32




                                                                 48
                                                                                                  38                             35




                                                              JAN-16                         JAN-17                            JAN-18


For market offers (chart 20 below), the retail component comes up as negative (-1) in 2016 and while
this could indicate that retail margins on market offers were low that year, there are a few issues worth
considering.

Firstly, the electricity retail market in South East Queensland was deregulated on 1 July 2016 and such
significant market changes typically have an immediate impact on retailers’ behaviour, in relation to
price setting and discounting. With the announced deregulation in Queensland, we saw more retailers
entering the market and higher discounts being offered. Secondly, we stress that these bill calculations are
inclusive of conditional pay on time discounts which only a proportion of customers would have been able
to obtain.28 Retailers’ with pay on time discounts (9 out of 11 retailers in July 2016) would therefore have
had higher revenue from bills than that estimated here. Thirdly, it should be noted that most retailers have
numerous live (but no longer marketed) offers available in each jurisdiction. Many Queensland customers
would therefore have been on other (older) offers, with different discounts, to those advertised as of July
2016. Most retailers will have customers on more expensive contracts (e.g. contracts with lower discounts)
while attracting new customers with higher discounts. Just as there will be cross-subsidies between
different customer segments (i.e. standing offer customers, market offer customers and solar customers),

28
  According to the ACCC, residential customers achieve pay on time discounts at 73% of the time. See, ACCC, Restoring
electricity affordability and Australia’s competitive advantage, Retail Electricity Pricing Inquiry – Final Report, June 2018, 264
                                                                   17
there are also cross-subsidies between customers within each segment. Fourthly, most retailers operate
in more than one jurisdiction and as gaining market share in a newly deregulated market would have been
a likely business strategy, customers in other jurisdictions may have cross-subsidised offers available to
customers in South East Queensland immediately after deregulation took effect.29

Since July 2016, the retail proportion of market offer bills have increased significantly while the NUOS and
“green scheme” proportions have decreased.

                                                                  NUOS      Wholesale       Retail   Green Schemes
     Chart 20 Bill-stack (%) for
     average market offer bills (all                                                    4                              5
     retailers), from July 2016 to July                   14
     2018 (8,000kWh per annum,                                                          17
                                                                                                                      21
     single rate, excl GST)

                                                          35
                                                                                        40
                                                                                                                      35




                                                          52
                                                                                        40                            39



                                                        -1
                                                      JAN-16                         JAN-17                        JAN-18


As in the case of market offer bills, the estimated retail proportion of solar bills (including pay on time
discounts) was negative in July 2016 (see chart 21 below).30 Unlike the non-solar market offers, however,
the retail component of solar bills has continued to remain relatively low in both 2017 and 2018.


     Chart 21 Bill-stack (%) for                                  NUOS     Wholesale        Retail   Green Schemes
     average solar offer bills (all
     retailers), from July 2016                                                         4                             5
                                                                                        4                             6
     to July 2018 (8,000kWh per                           15
     annum, single rate, excl GST),
     metropolitan households with
     3kW systems installed                                                              44                            40
                                                          36




                                                          57                            48                            49




                                                        -8- 1 6
                                                      JAN                           JAN-17                        JAN-18




29
   As we do not know the retail cost and profit component of bills, we estimate the amount by subtracting more known costs
from the average bill (see table 7 above). Obviously, there will always be a cost associated with electricity retailing and a negative
number for the retail cost component simply indicates that the retailers’ margins for that customer group (in that jurisdiction/
network area) was lower that year compared to years where there is a positive number.
30
   Note discussion on relevant market issues in discussion above chart 20.
                                                                  18
6. Solar offers

There are almost 550,000 small to medium scale solar systems in Queensland and eight out of ten ‘top
solar postcodes’ (by installations) are in the state of Queensland.31 Many of these households are currently
receiving a solar feed in rate (FIT) of 44 cents per exported kWh but as these schemes are closed to new
entrants, customers currently looking for solar offers need to assess both the retailers’ FIT rates as well as
the cost of electricity imported.

This section analyses and compares market offer bills for South East Queensland customers with 1.5 kW
and 3 kW systems installed. As retailers are not required to publish rates for solar products purchased and
installed through them, this analysis only examines electricity offers available to customers independently
of solar panels and installation.

Methodology and assumptions
To calculate the annual bills for the various solar market offers the following assumptions and methodology
have been applied:

     •   An annual household consumption of 8,000kWh (including both produced and imported).

     •   Calculations have been produced for households with 1.5 kW and 3 kW systems only.

     • For Brisbane households, an annual generation capacity per kW installed of 1.736 MWh and an
     export rate of 53.4% for 3 kW systems and 24.6% for 1.5 kW systems.32

     • For rural households, an annual generation capacity per kW installed of 1.857 MWh and an export
     rate of 56.4% for 3 kW systems and 29.5% for 1.5 kW systems.33

     •  Only FIT rates available to new customers have been included. Retailer funded FIT rates have
     been applied as per offer.

     •   For tariffs with controlled load, 15% of the total load has been allocated to the off-peak rate.

     •   A flat annual consumption has been assumed.

     • The annual bills have been based on quarterly bill calculations and all step increases have been
     applied as quarterly thresholds (including when the retail offer refers to daily or monthly thresholds).
     Daily fixed charges have been multiplied by 91 to calculate the quarterly amount.

Most retailers offer a higher FIT rate to Queensland households as of July 2018 compared to last year.
Table 8 shows retailers’ FIT rates for offers included in this analysis.




31
   Clean Energy Council, Clean Energy Australia Report 2018, 43
32
   These figures are based on NSW (outside Sydney) and were used for the analysis presented in a report for the Alternative
Technology Association (ATA) by Alviss Consulting (Alviss Consulting, Retail Offers and Market Transparency for New Solar
Customers, June 2013).
33
   Ibid
                                                               19
Table 8 Retailers’ FIT rates July 2018

 Retailer*                     Offer                                          FIT rate (c/kWh)
 AGL                           Solar Savers                                   20.0
 Click Energy                  Solar Bright                                   16.0
 Diamond Energy                Pay on time discount                           10.0
 Dodo Power & Gas              Market offer                                   8.5
 EnergyAustralia               Anytime Saver                                  16.1
 Energy Locals                 Save Me                                        12.1
 Origin Energy                 Solar Boost Plus                               16.0
 Powerdirect                   Market offer                                   10.6
 Sanctuary Energy              Supplementary FIT                              10.0
 Simply Energy                 Plus                                           11.3
 Mojo Power                    Connect                                        20.0
 Powershop                     Power Saver                                    9.5
 Red Energy                    Easy Saver                                     11.5
 Amaysim                       Solar 4                                        14.0
 Alinta                        Home Saver Plus                                11.0
 Q Energy                      Flexi Saver Home                               8.0

Chart 22 below compares annual retail bills for solar customers in Brisbane with 3 kW and 1.5 kW
installed. It shows that Click, Dodo, Sanctuary, Amaysim and Mojo’s offers produce annual bills above
the average for both 3 kW and 1.5 kW systems. Brisbane solar customers with 3 kW systems (and
this consumption level) would be approximately $730 per annum better off on Energy Australia’s offer
compared to Dodo’s offer. Customers with a 1.5 kW system installed may save $590 per annum if they
switched from Dodo to Energy Australia’s offer.

The average annual bill is approximately $1,420 for households with 3 kW systems and $1,835 for
households with 1.5 kW systems installed. This means that the average annual bill is $910 less for solar
households with 3 kW systems installed compared to non-solar households (see section 2.1 above).
Compared to last year, the average market offer for solar customers (3 kW systems) has decreased by
$160 or approximately 10%.34




34
  For non-solar households, the average market offer bill (including pay on time discounts) decreased by $190 or 7.5%. See
section 2.1.
                                                               20
3 kW        1.5 kW        3 kW avg        1.5 kW avg
     Chart 22 Annual bills including
                                                2,300                                                                      2,300
     discounts and FIT credits for
     Brisbane customers with 3 kW and           2,100                                                                      2,100
     1.5 kW solar systems. Electricity          1,900                                                                      1,900
     offers post July 2018 as annual bills,     1,700                                                                      1,700
     Tariff 11, 8,000kWh (GST inc)35
                                                1,500                                                                      1,500

                                                1,300                                                                      1,300
                                                1,100                                                                      1,100

                                                  900                                                                      900
                                                  700                                                                      700

                                                  500                                                                      500




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Figure 4 below shows estimated annual bills for solar market offers post discounts ranked from the lowest
annual bill to the highest.36




35
  Calculations include discounts off usage or bill as well as pay on time discounts off usage or bill.
36
  These bill estimates are based on rates published on the retailers’ websites between the 1st of July and the 1th of August 2018
and it must be noted that retailers may change their rates at any time. Additional discounts for customers choosing to pay by
direct debit are not included in these bill calculations.
                                                                21
Figure 4 Lowest to highest annual bills (incl GST) for solar market offers post July 2018, including discounts,
pay on time discounts and Feed-in-tariff – Metropolitan households with 3 kW solar systems, consuming
8,000kWh per annum (including generated and imported electricity), Tariff 11

            Energy Australia    $1,087

            Alinta              $1,233

            Powerdirect         $1,260

            Red Energy          $1,287

            Powershop           $1,291

            QEnergy             $1,305

            AGL                 $1,348

            Simply Energy       $1,398

            Origin Energy       $1,399

            Diamond Energy      $1,432

            Energy Locals       $1,436

            Mojo Power          $1,479

            Amaysim             $1,585

            Click Energy        $1,630

            Sanctuary Energy    $1,706

            Dodo Power & Gas    $1,814

Charts 23 and 24 below show annual bills for Brisbane solar customers on tariff 11, tariff 31 and tariff 33.

                                                            2,200
     Chart 23 Annual bills including
     discounts and FIT credits for Brisbane
     customers with a 3 kW solar system.                    2,000

     Electricity offers post July 2018 as
     annual bills, Tariff 11, 31 and 33,
                                              $ per annum




                                                            1,800
     8,000kWh (GST inc).37
                                                            1,600



                                                            1,400



                                                            1,200
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                                                                                 Tariff 11   Tariff 31   Tariff 33



37
     Ibid
                                                                            22
2,000
     Chart 24 Annual bills including
     discounts and FIT credits for Brisbane                         1,800
     customers with a 1.5 kW solar system.
     Electricity offers post July 2018                              1,600
     as annual bills, Tariff 11, 31 and 33




                                                      $ per annum
     8,000kWh (GST inc).38                                          1,400


                                                                    1,200


                                                                    1,000


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                                                                                    Tariff 11   Tariff 31   Tariff 33




Homes outside Brisbane’s metropolitan area will typically have less overshadowing and therefore a higher
generation capacity and export rate. Chart 21 compares annual retail bills for solar customers in Brisbane
with 3 kW and 1.5 kW installed. It shows that the annual bills for solar customers are somewhat lower in
non-metropolitan areas but the same retailers produce higher than average bills and the price-spread is
similar to that in metropolitan areas (see chart 22 above).


                                                                             3 kW   1.5 kW             3 kW avg         1.5 kW avg
     Chart 25 Annual bills including
                                                     2,300                                                                           2,300
     discounts and FIT credits for regional
     and rural customers with 3 kW and               2,100                                                                           2,100
     1.5 kW solar systems. Electricity               1,900                                                                           1,900
     offers post July 2018 as annual bills,          1,700                                                                           1,700
     Tariff 11, 8,000kWh (GST inc).39
                                                     1,500                                                                           1,500
                                                     1,300                                                                           1,300
                                                     1,100                                                                           1,100

                                                      900                                                                            900

                                                      700                                                                            700
                                                      500                                                                            500
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38
     Ibid
39
     Calculations include discounts off usage or bill as well as pay on time discounts off usage or bill.
                                                                            23
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