Energy Minister Angus Taylor said the price falls were especially welcome news during the coronavirus pandemic.
At a time when many people have lost jobs or had their hours or pay reduced, consumer advocates have warned householders to brace for bill shock as social distancing restrictions keep them home more often, increasing their power use.
The electricity price is linked to the gas price, which has been falling in recent months alongside the global price of crude oil. Oil has been driven down by a price war among producing nations and lack of demand from the transport sector due to coronavirus restrictions.
The Australian Energy Market Operator last week said east coast wholesale gas market prices in the first quarter of 2020 were down an average of 42 per cent on the same period the previous year. In dollar terms, gas had fallen from $9.75 a gigajoule to $5.63 – the lowest gas market price in four years.
Spot electricity prices were almost half the level of the final three months of 2019, falling from $130 per megawatt hour to $66 – the lowest level since the end of 2016.
“This [power price drop] was driven by lower gas prices, reduced operational demand, increased wind and solar output and a shift to lower-priced offers from black coal and hydro-generation,” AEMO said.
The DMO, introduced in July last year, was recommended by the Australian Competition and Consumer Commission in 2018 to prevent retailers charging excessive prices to standing offer customers.
“Loyal customers who find it confusing or hard to navigate energy pricing and discounts can now be assured they will no longer be taken advantage of by their retailer,” Mr Taylor said.
Customers’ contracts revert to standing offers when their discount deals expire. There are about 611,771 residential customers and 107,868 small business customers on standing offers on Australia’s east coast, excluding Victoria and North Queensland.
AER chairwoman Clare Savage said the default price was not designed to give the best price possible but to ensure an “energy provider can’t charge [customers] an unjustifiably high price”.
Customers should not underestimate the power of shopping around for a better deal, she said.
An earlier version of this story incorrectly used 2019 default market offer prices.
Mike is the climate and energy correspondent for The Age and The Sydney Morning Herald.
Peter Hannam writes on environment issues for The Sydney Morning Herald and The Age.