Aggressive trading tactics by electricity generators have worked to inflate wholesale prices, driving up household bills, the energy regulator has disclosed, with the generators profiting by hundreds of millions of dollars.
In particular, it has pointed to activity by Queensland generator CS Energy, which resulted in prices rising well above the levels in NSW, reversing the pattern of the previous years.
In its latest annual report, the market regulator, the Australian Energy Regulator, disclosed that "while average spot prices in Queensland eased in 2013-14, they were 14 per cent higher than NSW prices, after previously being lower for several years".
"Queensland spot prices were volatile during summer, repeating a pattern of the previous year."
Over the summer of 2013-4, the wholesale electricity price exceeded $1000 per megawatt hour on 50 occasions, it said, citing the so-called "rebidding" strategies of some Queensland generators for the volatility, as they push prices higher.
"CS Energy was by far the most active player rebidding capacity into high price bands (above $10,000 per MWh)," it pointed out, which drove up the average spot price to $68.77 a megawatt hour last summer.
That was 18 per cent above the $56.10 the price would have been otherwise
"The increase represents a wealth transfer of almost $200 million based on energy traded," the AER said in the report.
"More generally, spot price volatility puts upward pressure on forward contract prices, which, ultimately, flows through to consumers' energy bills."
As a result, plans are afoot to change the way the wholesale electricity market operates, to try to limit attempts to manipulate market prices.
The efforts by generators to seek to boost profits comes amid falling electricity demand, which is pressuring the generators.
Electricity output declined by 2.5 per cent to 194 terawatt hours in 2013-4 the AER said, and 3 per cent below forecast.
This has resulted in forecasts that there will be no need for additional power stations for the next decade, although the subsidy favouring the installation of renewable energy sources has resulted in the recent commissioning of the first commercial solar farm, the report noted.
